The geopolitical situation continues to cast a shadow over currency markets, which have been stuck in bizarre consolidations since early April, now 6 weeks into the ceasefire. EUR/USD is a typical depiction of this uncertainty, testing its resistance zone.
Global markets remain in a geopolitical holding pattern six weeks into the fragile Middle East ceasefire, and this week hasn’t shown many signs of change.
Diplomatic efforts have stalled, with both the US and Iran rejecting each other's proposals in a series of directionless indirect exchanges over the weekend.1
However, despite the stalled negotiations, the immediate odds of the conflict aggressively restarting remain fairly low2: Market participants are heavily leaning on the assumption that military action won’t resume3 ahead of the highly anticipated US-China summit between President Trump and President Xi Jinping, scheduled for May 13 to May 154, which is temporarily containing the broader geopolitical risk premium.
While geopolitics offers a temporary and uneasy safety net, upcoming macroeconomic events are set to drive volatility. Traders are preparing for significant US data releases this week, including CPI, PPI, and Retail Sales reports, which may influence the rate pricing and recent stable policy.
EUR/USD is testing the upper end of its 1.1650-1.1800 month-long consolidation range.
While price action remains near the top of this range, RSI momentum is not showing directional signs, diverging from its higher levels.
The pair is in a deadlock as traders await inflation data or geopolitical developments to get more clues on the direction of a potential breakout, if there is to be one.
EUR/USD 4H chart, May 11, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- Major 2025 resistance zone 1.18 (+/- 150 pips)
- 1.1850 - 1.1860 Resistance
- 1.18495 April highs
- Sep 2021 Highs – resistance 1.19 to 1.1950
Support levels
- 1.17 to 1.1720 March pivot and 4H 50-period MA
- 4H 200-period MA 1.16773
- Pivotal support 1.1635 to 1.1655
- 1.1540 to 1.1570 war support
This article and its contents are intended for educational purposes only and should not be considered trading advice.
