The EUR/USD currency pair traded with low volatility and a slight downward corrective bias on Wednesday. Traders continue to ignore the macroeconomic backdrop. Even if there is a market reaction to individual reports, it is extremely difficult to distinguish it from technical movements. Over the weekend, we discussed that the market is in a situation where a downward correction is needed. This downward correction we have observed for the fourth consecutive day. Where the price will be in a week is known only to God.

The situation that developed over the weekend is as paradoxical as the situation around the Strait of Hormuz and Iran. What have we seen? The pair has declined for two months due to geopolitical tensions. This means that the negative scenario for events in the Middle East has already played out. Check one box. Next, we observed a two-week rise against the backdrop of a temporary truce between Iran and the US and hopes for a swift resolution to the conflict. This means that the positive scenario has also played out. Check another box. What's next? For a new, powerful rise of the U.S. dollar, a significant escalation of the conflict in the Middle East is required. In simple terms, the situation needs to become much worse than it was a month ago. What might that entail? It seems that only a renewal of full-scale war involving all participants and the closure of the Bab-al-Mandab Strait would suffice.

However, neither Trump nor Tehran has a particular desire to return to war. The situation with Tehran is clear. Iran did not start this war, and therefore does not want to continue it. However, Tehran does not intend to sign Trump's "set of peace ultimatums." Iran wants to end the war, but on fair terms, which Trump cannot propose to his opponent. Simultaneously, the U.S. president also wants to end the war, as discontent among American consumers and voters continues to grow. The war negatively impacts the U.S. economy, and Trump may forget about a reduction in key interest rates by the Federal Reserve for a long time. Additionally, in November, Trump's party may lose elections in both chambers of Congress. Thus, the White House leader himself wants to resolve matters in the Middle East as quickly as possible, but how can he do so if Iran is unwilling to accept Trump's ultimatum?

Start a new chapter of war? What would that achieve when Iran has already shown and proven to the world that it is ready to fight as long as necessary? This leads to a situation in which both sides want to end the war, but one demands a series of conditions be met, while the other holds a set of trump cards that allow it to reject foreign ultimatums. The war is on pause, and this is the best option available at the moment. The absence of new escalations, the extension of the temporary truce, and no worsening of the situation with oil and gas in the Middle East is already a positive outcome. The EUR/USD pair is simply undergoing a typical technical correction at this time.

The average volatility of the EUR/USD currency pair over the last five trading days as of April 23 is 68 pips and is categorized as "average." We expect the pair to trade between 1.1646 and 1.1782 on Thursday. The upper channel of the linear regression has turned downward, indicating a trend change to bearish. However, the upward trend of 2025 could resume. The CCI indicator has entered overbought territory and formed a "bearish" divergence, signaling a downward pullback.

Nearest Support Levels:

• S1 – 1.1719
• S2 – 1.1658
• S3 – 1.1597

Nearest Resistance Levels:

• R1 – 1.1780
• R2 – 1.1841
• R3 – 1.1902

Trading Recommendations:

The EUR/USD pair continues its upward movement amid the weakening influence of geopolitics on market sentiment. The global fundamental backdrop for the dollar remains extremely negative; thus, we still expect long-term growth in the pair. When the price is below the moving average, short positions can be considered with targets at 1.1658 and 1.1646 on technical grounds. Above the moving average line, long positions are relevant with targets of 1.1841 and 1.1902. The market is gradually distancing itself from the impact of geopolitical factors, while the dollar loses its only driver for growth.

Explanations of Illustrations:

Linear regression channels help to define the current trend. If both are directed in the same way, it means the trend is currently strong;

The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) indicate the probable price channel in which the pair will operate over the next day, based on current volatility readings;

The CCI indicator – its entrance into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction may be approaching.