EUR/USD Bearish Momentum Persists Amid Geopolitical Tensions

EUR/USD Near Yearly Lows Amidst Dollar Strength

The EUR/USD currency pair is currently exhibiting bearish momentum, trading near its yearly lows as of March 5, 2026. This decline is driven by a confluence of factors, including increased demand for the US dollar as a safe-haven asset amidst ongoing geopolitical instability, particularly in the Middle East. The euro, on the other hand, is facing headwinds due to rising energy prices that disproportionately impact the European Union.

On March 3rd, the EUR/USD pair breached the January low around 1.15777, marking the lowest level seen this year. This breakdown underscores the persistent selling pressure on the euro relative to the dollar. Investors should monitor upcoming ECB announcements, particularly speeches by Christine Lagarde, which could introduce further volatility into the market.

Technical Analysis Points to Further Declines

Technical analysis of the EUR/USD chart reveals a descending channel formation, indicating a sustained downtrend. A bearish reversal observed recently occurred in the 0.382–0.5 Fibonacci zone, suggesting a weak recovery and reinforcing the bearish outlook. The pair also faced resistance at the channel median, further confirming the strength of the downward trend.

While the long lower shadow at point F suggests aggressive demand around the psychological level of 1.15000, the overall technical picture favors continued downside. Forex traders should be prepared for potential tests of new yearly lows and the lower boundary of the descending channel. The pair's movements remain sensitive to news from the Middle East, which could rapidly shift market sentiment.

Global Factors Influencing Forex Markets

The US Dollar's global significance cannot be overstated. It accounts for over 88% of global forex turnover, translating to an average of $6.6 trillion in daily transactions (2022 figures). The Federal Reserve's monetary policy plays a critical role in determining the dollar's valuation. When inflation exceeds the Fed's 2% target, interest rate hikes typically strengthen the USD.

Conversely, unconventional measures like quantitative easing (QE), which involves injecting liquidity into the financial system, can exert downward pressure on the US Dollar. Traders must closely monitor Fed policy announcements and economic data releases to gauge the potential impact on the EUR/USD pair and other dollar-denominated assets.

Kiwi and Aussie Under Pressure

Other currencies are also feeling the strain. The New Zealand Dollar (NZD) has weakened against the Greenback, trading around 0.5920, due to escalating geopolitical tensions. The Australian Dollar (AUD) is trading around 0.7050, paring gains from the previous session after breaking below the nine-day EMA.

The Reserve Bank of Australia (RBA)'s monetary policy decisions also significantly influence the AUD. Higher interest rates, relative to other major economies, typically bolster the AUD by attracting foreign capital seeking higher yields. China's economic performance is another critical determinant, as it is Australia's largest trading partner. Iron ore, representing approximately $118 billion in annual exports (2021 figures), constitutes Australia's largest single export commodity, with China being the primary importer.