Euro declines below 1.1600 on US-Iran war worries

The Euro (EUR) experienced a decline below 1.1600 against the US Dollar (USD) amid concerns surrounding the US-Iran conflict and the closure of the Strait of Hormuz. Traders were cautious in response to the UK Maritime Trade Operations reporting an incident involving a vessel struck by an unknown projectile while transiting the critical waterway.

US President Donald Trump had previously indicated a lack of interest in renewing the expiring agreement with Iran. Iran's Foreign Ministry spokesman, Esmail Baghaei, emphasized the challenges in reaching a deal, attributing it to security complexities and what he described as "obstructionist behavior of destructive elements," urging the US to remove its blockade.

Ongoing tensions in the Middle East may have contributed to the decline of the Euro, as assets like the US Dollar, viewed as a safe-haven currency, gained value in the face of geopolitical uncertainties. However, the expectation of a reduced rate hike by the Federal Reserve at the September meeting, coupled with softer-than-expected US economic data such as a drop in retail sales in July, weakened the USD.

Analysts highlighted the resilience of the Eurozone economy, citing solid underlying activity and reduced yield spreads between the Eurozone and the US, which supported demand for the single currency. The EUR/USD pair was consolidating around the daily opening pivot at 1.1573, supported by the 100-day simple moving average (SMA) just below, and it remained above the 20-day Bollinger middle band near 1.1498, indicating a constructive tone.

The pair faced resistance at the 20-day Bollinger upper band at approximately 1.1642 and found support at the 100-day SMA at 1.1570, the Bollinger middle band near 1.1500, and the lower band at 1.1355, which would form a broader demand zone if a more significant pullback occurred.