EURUSD loses ground after another wave of Middle East escalation

On Wednesday morning, EURUSD hovered around 1.15460 after its failed attempt to settle above the 38.2% Fibonacci retracement. A recent shift in sentiment regarding the Middle East crisis has been the primary engine of the pair’s dynamics. Lingering hopes for a potential de-escalation and the reopening of the Strait of Hormuz—which supported the euro at the start of the week—have just been crushed by another wave of rising tensions in the region. So, what do we have now? Demand for the dollar is growing, while the eurozone is feeling the heat from surging crude prices.

The fundamental landscape hints at a further decline in EURUSD. The American economy remains resilient, with May’s Nonfarm Payrolls significantly exceeding forecasts and oil exports climbing to record highs. These factors allow the Federal Reserve (Fed) to maintain a hawkish stance. According to market estimates, there is more than a 70% probability of a rate hike by the end of the year—another tailwind for the greenback.

The outlook for the eurozone, by contrast, leaves much to be desired. The regulator is expected to raise borrowing costs at the upcoming meeting on Thursday. However, this move looks forced and risks repeating the mistake of 2011, when monetary tightening amid the region’s weak economic performance led to a double-dip recession. Anyway, further hikes are unlikely, so the euro will lose this pillar of support.

Today’s US Consumer Price Index (CPI) report—expected to reach 4.2% year-over-year—could raise the odds of the Fed’s hawkish moves and put additional pressure on EURUSD.

Under these factors, the pair’s current modest upside seems unconvincing. The Chaikin Oscillator remains in negative territory, which indicates that distribution continues to outweigh accumulation, despite a moderate bounce from the extreme lows seen in early June. At the same time, prices are now recovering at a faster pace than the indicator itself—a sign that bullish momentum is weak and the move looks more like a corrective rebound.

Pay attention to the trading plan down below:

Sell EURUSD above 1.15450. Place Take profit at 1.14800 and Stop loss at 1.15960.

This forecast remains relevant between June 10 and June 17, 2026.