Mirages of victory and real problems

EUR/USD

Key zone: 1.1500 - 1.1600

Buy: 1.1620 (on strong positive fundamentals) ; target 1.1750; StopLoss 1.1560

Sell: 1.1500 (on a pullback following a retest of the 1.1550 level) ; target 1.1350; StopLoss 1.1560

Donald Trump’s statements about the situation around Iran — from “we have won” to “we do not need this strait” — look like an attempt to convince the markets that blocking a key transport artery does not pose a serious threat to the United States. However, in reality, such statements rather reflect an underestimation of the consequences of personal political adventurism.

In fact, the previous model of political and military partnership is no longer working. Demands addressed to NATO, European countries, as well as to Japan and South Korea to solve the blockade problem independently look like an admission that the United States is no longer capable of guaranteeing the security of global shipping on its own.

Trump directly stated that the United States would not guard the Strait of Hormuz — control, according to him, should be taken over by consumer states. In essence, this is an attempt to shift responsibility to allies for a crisis that has not been stabilized in three weeks.

What Has Changed

• We are observing a radical change in the global role of the United States.
• If earlier the United States acted as a security guarantor, now it is only a “consultant on request.”
• For the global economy, this means an increase in insurance premiums and the gradual militarization of trade routes.
• The current conflict has shown that U.S. military superiority is not always capable of resisting asymmetric economic pressure.

At the moment, the Strait of Hormuz is open only for episodic passages — mainly in the interests of China and India. Meanwhile, Iran has effectively turned the military conflict into a prolonged routine that the global economy cannot afford.

The lack of control over the waters of the Persian Gulf directly determines the economic price of what is happening. At the same time, diplomatic channels remain almost ineffective: attempts to discuss the blockade meet silence.

Time is working against the White House: every day of the strait’s blockade weakens U.S. positions rather than strengthens them. As a result, only verbal statements remain, which are no longer capable of hiding the growing problems of the global economy.

The Real Threat Is Hidden in Inter-Sector Links

The consequences of the conflict go far beyond the oil market:

• Pharmaceuticals — reduction in drug production in India due to disruptions in raw materials and packaging.
• Textile industry — decline in polyester production in China and Bangladesh.
• Electronics — shortage of raw materials for TSMC and Intel plants.
• Food — rising prices for fertilizers, fuel, packaging, and logistics.

The technology sector is also coming under pressure: the NASDAQ 100 has lost more than 2.5%, as rising energy prices are beginning to reduce investment in artificial intelligence and other technological areas.

The fear index VIX has increased by about 20%, reflecting a sharp rise in uncertainty in the markets.

Unexpected Decisions and Market Reaction

Treasury Secretary Scott Bessent announced a decision that a month ago seemed impossible: the United States is ready to temporarily soften restrictions in order to bring about 140 million barrels of Iranian oil to the market.

In fact, traders are increasingly reacting not to fundamental data but to statements from the Oval Office. Trump expects that the appearance of additional Iranian supplies will be able to lower oil prices before the rise in gasoline prices becomes a critical factor for American consumers.

The probability of Trump’s impeachment already in the current year is estimated by the markets at 72%, which further increases political uncertainty.

The Currency Market Is Behaving Atypically

Against the background of the oil rally, the euro is unexpectedly strengthening, while the U.S. dollar is beginning to lag behind. In this situation, the European Central Bank is effectively forced to develop new approaches to combating the crisis that has already begun.

Europe is entering a period of prolonged inflation with weak economic growth, where traditional monetary instruments are practically powerless against the closed Strait of Hormuz and rising energy prices.

Technical analysis in such conditions is losing its effectiveness — the currency market is increasingly reacting not to charts but to the news background.

So we act wisely and avoid unnecessary risks.

Profits to y’all!