The EUR/USD currency pair traded very calmly for most of the day on Tuesday. Even by the end of Monday, it cannot be said that the market had once again fallen into a state of shock due to the escalation of the conflict in the Middle East. The US dollar strengthened, but how much? By a few dozen pips? The total volatility on Monday was about 60 pips, which is an average value closer to the low. Therefore, we can immediately draw the obvious conclusion: the market has not completely abandoned the geopolitical factor, but its influence on the currency market continues to decrease. However, we have been discussing this for several weeks in a row. The market is no longer ready to respond to every piece of news, every missile launched in the Middle East, and every "insider" about negotiations between Iran and the US. Think about it: if the conflict lasts another 5 years, will markets trade solely on geopolitical factors all that time? After all, the macroeconomic background continues to be ignored...

As a rule, in such situations, the market reacts only to the onset of the conflict, and then only to the most important events that will inevitably affect the world economy. And now, oil prices at $120 have long been accounted for by all markets. The closure of the Strait of Hormuz has long been factored in by the markets. Military actions and the destruction of oil and gas infrastructure have already been factored in by the markets. Everyone who wanted to flee from the Middle East and take their capital with them through the dollar has already done so long ago. Thus, the dollar has no more reasons to show growth with each missile launched and each destroyed infrastructure facility in the Middle East.

Of course, if the conflict escalates further and becomes large-scale, the dollar will likely strengthen. If the situation worsens even more than it is now, oil may rise to $200 per barrel, and another dozen countries may join the conflict. Such a scenario cannot be completely dismissed. However, under current circumstances, we do not see signs of the conflict intensifying, but we also see no signs of its possible resolution.

Negotiations between Tehran and Washington resemble a pun. Like everything related to America since Donald Trump took the presidency for the second time. For example, not later than Monday, Trump announced plans to raise tariffs for the European Union, which has been ratifying a trade agreement with tariffs on European goods, which the US Supreme Court has officially recognized as illegal, for too long. However, Trump does not care about the decision of some court. The deal with the EU is agreed upon, and now Brussels wants to back out of it, rightly believing that if the tariffs are illegal, then it would be wise to review the terms of the agreement. How Trump plans to raise tariffs for the EU to 25% when he can legally set them at a maximum of 15% is unclear. However, it is probably already clear to everyone that Trump will do as he sees fit. Whether these decisions are legal concerns him long ago. Seriously, the Supreme Court declared Trump's tariffs illegal, and so what? Did the US President take responsibility for his actions? No. Did the US government return $150 billion in illegally collected payments to the American public? No. So, any new tariffs can be introduced, collect money, and then if they are struck down by the court, it's no big deal. New ones can be introduced.

The average volatility of the EUR/USD currency pair over the last 5 trading days as of May 6 is 69 pips, which is "average." We expect the pair to move between levels 1.1633 and 1.1771 on Wednesday. The upper linear regression channel has turned downward, indicating a change in trend to a bearish one. However, a bullish trend from 2025 may actually resume. The CCI indicator has entered the overbought zone and formed two "bearish" divergences, signaling a downward correction.

Nearest support levels:

S1 – 1.1658

S2 – 1.1597

S3 – 1.1536

Nearest resistance levels:

R1 – 1.1719

R2 – 1.1780

R3 – 1.1841

Trading recommendations:

The EUR/USD pair maintains an upward trend amid weakening geopolitical influence on market sentiment and declining geopolitical tensions. The global fundamental background for the dollar remains extremely negative, so in the long term, we still expect the pair to rise. With the price below the moving average, short positions can be considered with targets at 1.1658 and 1.1633 based on technical grounds. Above the moving average line, long positions are relevant with targets at 1.1780 and 1.1841. The market continues to move away from geopolitical factors, and the dollar loses its only growth driver.

Explanations for the Illustrations:

• Linear regression channels help determine the current trend. If both are pointing in the same direction, it indicates a strong trend.
• The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should be conducted.
• Murray levels – target levels for movements and corrections.
• Volatility levels (red lines) – indicate the probable price channel in which the pair will spend the upcoming day, based on current volatility metrics.
• CCI Indicator – its entry into the overbought (above +250) or oversold (below -250) areas signals that a trend reversal is approaching in the opposite direction.