EURUSD under threat: the euro is losing ground against the backdrop of the crisis in the Middle East

The euro continues to lose ground against the backdrop of the escalating conflict in the Middle East. The current quote is 1.1635. More details are in our analysis for 18 May 2026.

EURUSD forecast: key takeaways

• The market is waiting for the publication of the Fed meeting minutes
• Negotiations between the US and Iran have effectively reached a dead end
• The Fed and the ECB may raise interest rates in the near future
• EURUSD forecast for 18 May 2026: 1.1675 and 1.1575

Fundamental analysis

The EURUSD forecast takes into account that, against the backdrop of the escalating conflict in the Middle East, the euro continues to lose ground.

Negotiations between the US and Iran have effectively reached a dead end. The US side put forward tough conditions for Iran: the removal of uranium and the rejection of compensation. Tehran responded that it considers these conditions unacceptable. The Strait of Hormuz remains effectively closed. This is putting pressure on oil prices and triggering a flight by investors into the dollar as a safe-haven asset. The market fears a resumption of direct military action.

The probability of a Fed interest rate increase is rising day by day against the backdrop of growing inflation in the US. A key factor may be the publication of the Fed meeting minutes, which will show how seriously the regulator is considering the option of raising the interest rate.

The euro is under pressure from its own factors: low GDP and expensive energy, which is driving inflation higher. Against this backdrop, the ECB may raise the interest rate in the near future.

The forecast for 18 May 2026 takes into account that the EURUSD rate has become hostage to geopolitics and energy prices. If military action between the US and Iran resumes, EURUSD quotes may continue to fall, as against this backdrop the USD looks more attractive than the euro.

Technical outlook

On the H4 chart, near the lower Bollinger Band, EURUSD formed an Engulfing reversal pattern. At this stage, quotes may form an upward wave as part of the signal’s development. Since they remain within the boundaries of an upward channel, resistance around the 1.1675 mark may act as the upside target. If this level is broken, the market will open the way for the continuation of the upward trend.

At the same time, today’s EURUSD forecast also assumes another scenario. Quotes may continue the downward wave and test support around the 1.1575 mark. Then, after a rebound, they may continue the upward trend.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: downward
• Key resistance levels: 1.1675 and 1.1775
• Key support levels: 1.1575 and 1.1510

EURUSD trading scenarios for today

Main scenario (Sell Stop)

A breakout of the 1.1575 support level with consolidation below it will indicate pressure from sellers and create conditions for opening short positions in the pair.

• Take Profit: 1.1510
• Stop Loss: 1.1600

Alternative scenario (Buy Stop)

A breakout of the resistance level around the 1.1675 mark and consolidation above it will indicate stronger pressure from bulls and may trigger growth in quotes towards the 1.1775 mark and above.

• Take Profit: 1.1775
• Stop Loss: 1.1650

Risk factors

The main risks to the EURUSD downside scenario remain a reduction in tension in the Middle East and the Fed’s interest rate decision.

Summary

The situation in the Middle East remains one of the main factors influencing EURUSD quotes. EURUSD technical analysis suggests growth in quotes towards the 1.1675 mark before a decline.

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