The euro-dollar pair showed an upward trend on Monday following a prolonged decline to the 14-figure mark. On Friday, sellers updated the eight-month price low to 1.1412 but were unable to (or did not have time) to break the support level at 1.1410 (the lower line of the Bollinger Bands indicator on the W1 timeframe). On Monday, buyers of EUR/USD took the initiative, testing the boundaries of the 15 figure. However, given the existing fundamental background, such price spikes appear unreliable. Long positions remain risky, even amid the confident, almost pullback-free price increase.

The correction of EUR/USD is due to several fundamental factors. The key factor is a form of "stabilization" in the military conflict in the Middle East, meaning a temporary absence of further escalation.

On one hand, the situation is still far from resolution. The United States and Israel continue to carry out airstrikes against Iran, while Iranian forces persist in attacking American military bases and oil infrastructure in nearby countries. The Hormuz Strait remains blocked—transit is open only to Chinese and (reportedly) Indian ships.

On the other hand, there is currently "limited" escalation in the Middle East, without reaching the most acute, dangerous, or catastrophic scenarios. The current situation creates an impression of relative "stability." For example, it has now become clear that Donald Trump is avoiding deploying American military contingents into deep Iran. He is also in no rush to resolve the Hormuz Strait blockage. The United States, which has the largest navy in the world, is keeping its naval forces sufficiently far from the shores of Iran, such as the aircraft carrier Abraham Lincoln, which has retreated more than a thousand kilometers from Iranian shores, while the USS Gerald Ford remains in the Red Sea. Meanwhile, the head of the White House has called for NATO to provide military assistance to unblock the strait, but has, in effect, received a refusal: representatives of the Alliance have not sent their warships to the region.

The market interpreted the current situation as a signal that the United States is not ready for immediate and unilateral escalation of the war. A sort of vacuum has formed, allowing EUR/USD buyers to organize a corrective pullback. Additionally, there is relative stabilization in the oil market—the rate of price increases for "black gold" has slowed, although it remains above $100 per barrel. This sentiment was influenced by statements from US Energy Secretary Chris Wright, who indicated that the Middle Eastern conflict "may end within the next few weeks," after which oil supplies would be restored, and energy prices would decline.

Yet, despite the currency market interpreting these signals so definitively in favor of the euro, it is still too early to speak of a trend reversal for EUR/USD. In fact, Donald Trump finds himself in a zugzwang situation where each subsequent move only exacerbates the current predicament.

Without appropriate agreements with Iran, Trump cannot simply exit the conflict by declaring that all set tasks have been accomplished. If the Iranian blockade of the Hormuz Strait continues, the United States will look like the losing side, regardless of what victorious statements Trump makes. Such a scenario is unacceptable for the White House, not from the standpoint of foreign policy prospects (the risk of diminishing trust among US allies and partners in American security guarantees) or the domestic political situation (in the context of the upcoming mid-term elections in Congress).

However, prolonging the war also entails serious political risks. The initially set goal of regime change in Iran does not currently seem attainable. Moreover, the cost of "final victory" is becoming unacceptable to domestic voters, especially amid rising energy prices (the average gas price in the US has increased by 60 cents in two weeks, reaching $3.70). A protracted, costly conflict with significant expenses could lead to a serious decline in ratings for Trump and the Republican Party ahead of the fall congressional elections. However, it remains unclear how Trump can extricate himself from this trap without political losses.

At the moment, the White House is promoting the idea of forming a "coalition" to unblock the Hormuz Strait by involving military ships from other countries. However, this has also encountered problems, as allies are reluctant to enter a "hot zone" without a clear plan, which Washington lacks. According to the Financial Times, the UK, France, Germany, Greece, Italy, and Japan have already stated that they do not plan to send ships to the region. Trump's threats that "NATO faces a very bleak future if allies do not help the US unblock the strait" have had no effect.

The situation is at an impasse. Washington finds itself in a position where something must be done about a clearly unsuccessful military campaign, but it is still unclear what specific steps should be taken. This is precisely why there is already talk in the US that the meeting between Trump and Xi Jinping, scheduled for the end of March, may be postponed (announced by White House spokesperson Caroline Levitt). This means that the Middle Eastern conflict is becoming more complicated by the "Chinese factor": amid a stalemate situation for the US, Beijing is strengthening its position in the upcoming trade negotiations.

Thus, the existing fundamental backdrop for the EUR/USD pair does not favor sustainable price growth. Therefore, the current corrective pullback should be viewed as an opportunity to open short positions with the first target at 1.1450 (the Tenkan-sen line on the H4 timeframe), the overcoming of which will open the way for EUR/USD sellers to the 14 figure.