EURUSD, DXY Price Outlook: Fragile Ceasefire Reinforces Risk Premium

A fragile ceasefire continues to reinforce the risk premium across global markets, particularly through higher-for-longer crude oil price concerns. However, caution remains warranted, as a tangible and lasting ceasefire solution is still not in sight.

Following the announcement of a two-week ceasefire alongside the reopening of the Strait of Hormuz, it became clear that Lebanon was not included in this framework. This exclusion triggered the heaviest IDF strikes since the start of the war, reigniting tensions across the region.

Strait of Hormuz Closure Risks Persist

The situation has since escalated, with renewed attacks involving Iran, once again raising concerns over disruptions to normal flows through the Strait of Hormuz, the critical artery for global energy markets and global risk sentiment at the moment. Click here to watch my latest crude oil chart breakdown. The US CPI is another key catalyst besides the middle east conflict developments for the markets this week, noting the persistent escalations.

Cross-Asset Reaction: Key Levels in Focus

The latest market highs, driven by the initial ceasefire headlines, tested critical resistance levels, defining key long-term bullish and bearish thresholds:

• Crude oil rebounded from the $85 support, closing back near the $90 range
• Gold pulled back from the $4,800 resistance, while silver retreated from 78
• Nasdaq rejected the 25,000 resistance, while the Dow Jones pulled back from 48,000

FX Markets: Dollar Rebounds as Risk Premium Builds

• The DXY rebounded from the 98.50 support, while EURUSD pulled back from the 1.1720 resistance
• Market expectations for no further rate hikes this year may begin to shift again, as crude prices regain traction above $92 and renewed Hormuz disruption risks re-enter pricing dynamics

DXY Price Outlook: Monthly Time Frame – Log Scale

Source: Trading view

The DXY outlook remains structurally bullish, holding within a long-term ascending channel in place since 2008. This bias remains intact unless a decisive break below the 98.50, 98.00, and 97.00 support levels materializes.

These levels correspond to the 50%, 78.6%, and 100% Fibonacci retracement of the bullish rebound between the February 2026 lows and March 2026 highs.

The current risk premium environment supports this bullish outlook. A confirmed move back above the 100.60 zone would validate a bullish breakout scenario, targeting 101.80 and 104.40 respectively.

Such a move would likely pressure major currency pairs and precious metals lower, reinforcing USD strength.

EURUSD Price Outlook: Daily & Monthly Time Frame – Log Scale

 

Source: Trading view

Both the daily and monthly charts provide a clearer perspective on EURUSD’s positioning.

On the daily timeframe, EURUSD’s bullish rebound has pulled back from the 1.1720 resistance, aligning with broader DXY strength.

• A daily close above 1.1720 would challenge the bearish outlook, opening the door for gains toward 1.1820 and 1.1940, before potentially extending above the 1.20 psychological level
• On the downside, as the risk premium rebuilds, a break below 1.1650 exposes key support levels at: 1.1580, 1.1520, 1.1480

This could either result in:

• Another bullish rebound within the range extending since June 2025, or
• A deeper breakdown toward the upper boundary of the descending channel on the monthly chart, targeting: 1.1300, 1.1190, and 1.1060

Written by Razan Hilal, CMT

Follow on X: @Rh_waves