Renewed US strikes on Iran and the threat of disruption at the Strait of Hormuz have pushed EUR/USD toward 1.1400, with analysts arguing Europe's energy exposure tilts the pair's risks back to the downside. Technical structure now favors selling into rallies, with support seen near 1.1355 and 1.1200.
The euro has slid toward the 1.14 level as the US resumed strikes on Iran following attacks on commercial shipping in the Strait of Hormuz, reviving the risk that markets must again price prolonged disruption to one of the world's most important energy chokepoints. That backdrop, according to Investing.com analyst David Scutt, tilts the balance of risk for EUR/USD back toward the downside.
Why Europe carries the greater burden
Scutt argues the eurozone remains far more exposed to Middle Eastern energy shocks than the United States. Europe's heavier reliance on imported energy leaves it more vulnerable, weighing on economic sentiment and capital flows. Since the conflict began, the euro has weakened while European equities have generally underperformed comparable US peers.
Higher energy prices could increase the odds of another ECB rate hike later this month, yet Scutt suggests the potential hit to growth may prove the more important driver for the currency. The path lower has not been clean, however. Throughout the conflict, markets have repeatedly lurched between reports of imminent de-escalation and renewed hostilities, whether from Trump or sources familiar with the negotiations.
The dollar draws safe-haven flows
The move also reflects what is happening across the Atlantic. US interest rates jumped as word spread that Washington had struck Iran again, and that lifted the dollar while pressuring the euro, according to DailyForex analyst Christopher Lewis. Concerns about rising US rates, potential inflation, and demand for the dollar as a haven point, in his view, toward an eventual break lower.
Where the levels sit
The pair shows lower highs and lower lows below its key moving averages, with a rising wedge that Scutt reads as bearish continuation. Support sits at 1.1355, the 38.2% Fibonacci retracement, then the June 24 swing low at 1.1325 and a broader zone near 1.1200. On the topside, 1.1450 and 1.1480 cap rallies ahead of 1.1500 and 1.1566.
Lewis sees the market forming a bearish flag that could send it toward 1.12, with the 50-day EMA just above the 1.15 level marking the barrier traders watch. According to DailyForex: "I think 1.12 is more likely than 1.16 in this market."
Sources: Investing.com, DailyForex
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