The EUR/USD currency pair rose moderately on Monday, reflecting traders' current mood—"cautious optimism." Essentially, this optimism is based solely on the number of positive news items in the general information flow. As more experts, insiders, media, and news agencies report on the imminent conclusion of a deal between Iran and the U.S., the market inevitably begins to believe in a positive future. In reality, there are no signs of a comprehensive, fair, and mutually satisfactory agreement at this moment. Facts should be prioritized over anyone's opinions or insider information.

Insider reports are a topic in their own right. For example, Fox News believes the agreement is 95% complete, with only minor details left to coordinate. Meanwhile, other media outlets report that there is indeed progress, but not on the "nuclear issue." Without "nuclear understanding," there will be no sustainable and lasting peace. The parties may agree on all contentious points, but if consensus is not reached on the nuclear aspect of the conflict, no deal will materialize.

The Strait of Hormuz could be opened as early as tomorrow. All it takes is to stop targeting ships that wish to pass through it. There is no significant problem there. It is just as easy to close it again—simply start targeting ships that want to cross. Therefore, reopening Hormuz without a long-term peace between Iran and the U.S. makes little sense. Certainly, global energy tensions will ease, oil prices will begin to decline (they already have, though the Strait is still closed), and inflation will slow. But for how long?

At this moment, Tehran and Washington have supposedly agreed only on a memorandum of understanding. This memorandum represents merely the initial stage of negotiating a final deal, which will allow for the reopening of the Strait of Hormuz, the lifting of some sanctions on Iran, and the cessation of hostilities. After that, the parties will try to achieve a lasting peace, for which, as previously stated, full agreement on the "nuclear issue" is required. Judging by the information coming from independent, non-Republican sources, there is still no progress on this front.

Thus, while the market can indeed celebrate, it is reasonable to note that any agreement, extension of the ceasefire, or reopening of Hormuz is better than continuing the blockade and war. However, joy and euphoria can swiftly turn into a collapse of negotiations and a renewal of war. This must be anticipated as well. In the coming days and even weeks, the demand for the U.S. dollar will likely decrease as the market prepares for a deal. If news emerges of failed negotiations or if the market begins to understand that "nuclear progress" remains elusive, the dollar will again be in demand as a safe asset. The EUR/USD pair will have to swing on these "swings" until a final truce is established between Iran and the U.S.

The average volatility of the EUR/USD currency pair over the last 5 trading days as of May 26 is 54 pips, which is "average." We expect the pair to trade between 1.1599 and 1.1679 on Tuesday. The upper channel of the linear regression has turned upwards, indicating a trend shift to the upside. In fact, the upward trend for 2025 could have resumed as much as a month ago. The CCI indicator has entered the overbought zone and formed two "bearish" divergences, signaling the start of a downward correction that is still underway.

Nearest Support Levels:

S1 – 1.1597

S2 – 1.1536

S3 – 1.1475

Nearest Resistance Levels:

R1 – 1.1658

R2 – 1.1719

R3 – 1.1780

Trading Recommendations:

The EUR/USD pair continues its downward movement, which is likely a correction within the broader global upward trend. The global fundamental backdrop for the dollar remains extremely negative, and only geopolitical factors regularly support it. When the price is below the moving average, shorts can be considered with a target of 1.1536. Above the moving average line, long positions remain relevant with targets of 1.1780 and 1.1841. The market has continued to move away from geopolitical factors, but in recent weeks, the dollar has become more sought after as market hopes for peace in the Middle East have weakened.

Explanations for Illustrations:

Linear regression channels help determine the current trend. If both are directed in the same way, the trend is currently strong;

The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should be conducted right now;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) indicate the probable price channel in which the pair will reside over the next 24 hours, based on current volatility metrics;

CCI indicator – its entry into the oversold area (below -250) or overbought area (above +250).