Geopolitical Risk Impacts Forex: EUR/USD and GBP/USD Analysis

Geopolitical tensions between Iran and the United States continue to weigh on market sentiment as the blockade of Iranian ports persists. Iranian President Masoud Pezeshkian has emphasized that meaningful dialogue is currently impossible without a demonstrable shift in U.S. policy. Consequently, Tehran has signaled its intention to maintain all necessary measures to protect its national interests.

Strait of Hormuz and Energy Impact

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Recent military activity in the Strait of Hormuz, including attacks on commercial vessels attempting to breach the blockade, has confirmed that this vital transit route remains effectively closed. These developments have sent a clear signal to the market that a swift resolution is unlikely. This physical disruption has directly contributed to rising oil prices as global strategic reserves face potential depletion.

The situation is further complicated by conflicting signals from the U.S. administration regarding a potential deal. While leadership changes have occurred in Tehran, the underlying political stance of the new officials remains largely unchanged. This uncertainty has left market participants questioning the feasibility of upcoming negotiations, contributing to the current hesitation in the currency markets.

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EUR/USD Technical Outlook

Technical analysis of the EUR/USD pair indicates that the instrument is currently navigating a corrective structure within a broader upward trend. Current price action suggests that the corrective wave set may be reaching completion at existing levels. Without a stable, long-term truce in the Middle East, the pair is likely to initiate a new downward wave set.

GBP/USD Wave Analysis

For GBP/USD, the wave structure has formed a clear three-wave upward pattern which appears to be complete. This technical setup favors the formation of a descending wave, with a base scenario targeting the 1.3400 handle or slightly below. Any extension of the upward segment would likely require a significant de-escalation of regional conflict.

Conclusion and Market Outlook

In the short term, price action for major currency pairs will continue to be dictated by developments in the Middle East and energy supply concerns. The absence of active negotiations typically points toward further escalation rather than peace. Analysts advise focusing on simplified wave structures and clear support levels while maintaining strict risk management protocols during this period of high volatility.

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