Oil, EUR/USD Forecast: Two trades to watch

Oil rises as Middle East tensions persist

Oil prices are rising, with Brent moving above $110 per barrel and WTI approaching $100, as geopolitical tensions in the Middle East continue to drive supply concerns.

Markets are awaiting clarity on US–Iran negotiations, particularly around the Strait of Hormuz, which remains closed. The US is reviewing Tehran’s latest proposal to resolve the conflict, but Donald Trump has so far rejected it, citing concerns that it does not sufficiently address Iran’s nuclear programme.

This leaves the two-month-long conflict at a stalemate. The longer the Strait remains closed, the greater the upside risk to oil prices. However, a sudden de-escalation, government intervention, or demand destruction could trigger a pullback.

Warnings of demand destruction are already emerging. The supply shock—disrupting up to 13 million barrels per day—is beginning to weigh on consumption, particularly in Asia. The International Energy Agency has warned that high prices could force reduced demand, either through affordability constraints or policy intervention.

Oil forecast – technical analysis

Oil recovered from the 78.00 April low, rising above the 50 SMA and the 20 SMA around 98.00, which, combined with the RSI above 50, keeps buyers hopeful of further upside.

Buyers would need to extend gains towards 100.00, the psychological level, and look towards 105.00, the 23.6% Fib retracement of the 55 low and 120 high.

Support can be seen at 95.00, the 38.2% Fib retracement level to bring 88.00 into focus, the 50 SMA, and the 50% Fib retracement level. Below here, sellers could gain traction towards 80.00, the round number.

EUR/USD slips below 1.17 with the ECB and FOMC meetings in focus this week

EUR/USD is slipping below 1.17, hitting a two-week low, as investors assess ongoing uncertainty around Iran negotiations and prepare for a busy week of central bank decisions and key data releases.

Eurozone inflation and GDP figures are due on Thursday, just ahead of the European Central Bank rate decision. The ECB is expected to leave rates unchanged, adopting a wait-and-see approach as it monitors the impact of rising energy prices. While headline inflation is expected to increase due to higher fuel costs, policymakers may wait for signs of broader underlying price pressures before acting. Markets are currently pricing in two rate hikes this year.

Attention is also on the Federal Reserve policy decision. The Fed is expected to keep rates unchanged at 3.50%–3.75%, as policymakers assess the economic impact of the conflict.

Chair Jerome Powell is likely to emphasise a “wait-and-see” approach, balancing rising inflation driven by higher energy prices against risks to growth and employment. The conflict is pushing up fuel costs—adding to inflation—while also increasing uncertainty for businesses, which could weigh on hiring.

These opposing forces complicate the Fed’s policy path. Keeping rates higher for longer could help contain inflation, while easing policy could support growth. Powell is expected to address this trade-off in his press conference, likely reinforcing expectations that rates will remain on hold for an extended period.

The meeting may also bring attention to Fed leadership. Powell’s term as Chair ends in May, although he remains on the Board of Governors until 2028. Meanwhile, Kevin Warsh is progressing through the confirmation process as a potential successor.

EUR/USD forecast - technical analysis

EUR/USD recovered from the 1.1410 low, rising to a peak of 1.1850 before easing back to the 200 SMA at 1.1680. The price holds above the near-term rising trendline and the 200 SMA, keeping a bullish bias, although momentum is slowing.

Buyers will need to rise above 1.1850 resistance to create a higher high and extend gains towards 1.1830, the February high.

Support is at 1.1675, the 200 SMA, and trendline support. A break below here opens the door to 1.16, the round number ahead of 1.1450.