Euro Falls, Dollar Strengthens
The EUR/USD pair again came under selling pressure and remained below the 1.1600 level in Asian trading on Wednesday. This weakness marked the third consecutive day of EUR/USD declines, and also showed that the bounce from the 1.1530 area, the lowest level since November 2025, was not strong enough to change the short-term trend.
Market sentiment remains dominated by a "risk-off" mode due to the escalating conflict in the Middle East, which has led to renewed demand for the US dollar as a safe-haven asset. This condition strengthens the USD's position as the global reserve currency during times of heightened uncertainty, thus maintaining high demand for the greenback despite widening market volatility.
In addition to geopolitical factors, inflation concerns also strengthened the USD. Surging energy costs due to the risk of supply disruptions, particularly if distribution flows in the Gulf region are disrupted, leading the market to believe that price pressures could persist for longer. As a result, expectations of Fed monetary policy easing tend to be restrained, ultimately supporting the dollar and pressuring EUR/USD.
For Europe, the energy narrative is an additional burden on the euro. Dependence on energy imports means rising oil and gas prices have the potential to become an "economic shock" that erodes growth prospects and increases the risk of imported inflation. This combination makes the Euro relatively more vulnerable compared to the USD amid global uncertainty.
Market participants are now awaiting the final Eurozone Services PMI data for short-term direction, then turning to US events such as the ADP and ISM Services PMIs. However, the primary focus remains on geopolitical developments, as headlines related to conflict and energy pathways can quickly shift sentiment, particularly through their impact on oil, inflation, and interest rate expectations.
Silver outlook & prediction: If risk-off persists and energy tensions trigger hedging demand, silver has the potential to strengthen, following safe-haven assets. However, this strengthening could be bumpy, as silver is highly sensitive to a strong USD and high yields, two factors that typically restrain precious metal rallies. Therefore, the most likely scenario: silver is likely to rebound/rise gradually as long as conflict headlines remain hot, but potentially volatile and susceptible to correction if the dollar surges again or the market becomes more hawkish on interest rates. (Asd)
Source: Newsmaker.id
