Middle East War Fears Grip Markets Ahead of NFP

EUR/USD momentum stalls. Consolidation continues ahead of potential breakout

Tensions between the U.S. and Iran have erupted in military conflict over the weekend as joint U.S. and Israeli forces struck Iran. The strike was aimed at destroying Iran’s nuclear capabilities and potentially overthrowing the current regime.

According to a post made by President Trump on TruthSocial, the Supreme Leader of Iran, Ayatollah Ali Khamenei had been killed. The President continued by urging Iranians to take back their country: “This is the single greatest chance for the Iranian people to take back their Country. We are hearing that many of their IRGC, Military, and other Security and Police Forces, no longer want to fight, and are looking for Immunity from us.”

Oil prices will be affected until the conflict reaches a conclusion because Iran produces approximately 3.4 million barrels per day, which is roughly 4% of the world’s total supply. Also, risk-on assets will probably be affected due to a ‘flight to safety’ mindset until the conflict subsides.

Economic Calendar Highlights

The main event of the week will be the release of the U.S. jobs data, but before that, traders will focus on the U.S. Manufacturing PMI, scheduled for Monday at 3:00 pm GMT. The Services PMI will come out on Wednesday at 3:00 pm GMT. These are not massive market-movers, but they help paint the overall picture of the U.S. economy.

Friday will be the most important day of the week as the U.S. Non-Farm Payrolls report is set for release at 1:30 pm GMT. The forecast is 58K, much lower than the previous 130K, and lower numbers may change the rate cut probabilities, as job creation is a constant concern of the Fed. The Average Hourly Earnings and the Unemployment Rate will be posted at the same time, together painting a picture of the U.S. labor market.

The U.S. Retail Sales and Core Retail Sales will come out on Friday at 1:30 pm GMT as well. Sales made at retail levels represent the main part of consumer spending, which in turn accounts for the majority of overall economic activity.

Technical Outlook – EUR/USD

The pair is still hovering around 1.1800, struggling to gain a sense of clear direction. After the top at 1.2080, the dollar bulls have been mostly in control, but momentum has diminished lately. The U.S.–Iran conflict will likely affect price action going forward.

Recent candles have been small and with long wicks, which is a sign of indecision. The RSI is trading in the middle of its range, without providing any clear signs of direction. Until we see a clear breakout, the pair is stuck in a range, defined by 1.1900 resistance and 1.1600 support.