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The EUR/USD pair declined by 0.21% on Thursday as risk-averse sentiment dominated markets amid ongoing Middle East tensions. Strong US economic data, including improved manufacturing and labor market indicators, bolstered the dollar's appeal, pushing the euro lower toward the 1.1600 level. Traders are closely monitoring the Fed's potential policy response and geopolitical developments in the region. This move highlights the dollar's resilience against the euro, driven by divergent monetary policy trajectories. The US Dollar Index (DXY) rose to 103.5, reflecting renewed confidence in the greenback. For forex traders, the 1.1600 psychological level now acts as a critical support zone, with a break below it likely to trigger further downside momentum. Looking ahead, investors should watch Friday's nonfarm payrolls report for additional USD momentum clues. The Middle East conflict's impact on oil prices and global risk appetite could also influence EUR/USD volatility. Technical indicators suggest a bearish bias if the pair fails to reclaim 1.1700 resistance.
