EUR/USD: Sidelined amid geopolitical tensions, eyes German data

• Euro is barely moving in response to the US-Iran tensions. 
• Markets may put a haven bid under the single currency. 
• German inflation is forecasted to have risen by 0.5% in December. 

EUR/USD is lacking a clear directional bias amid the heightened US-Iran tensions and the resulting risk-off tone in the markets.

The US on Friday attacked an airport in Baghdad, killing Qassem Soleimani, Iran’s most admired military figure, and Abu Mahdi al-Muhandis, the deputy commander of Iran-backed militias.

Geopolitical experts think the US move will have major implications for the entire middle east. Notably, Richard Hass, President of Council on Foreign Relations, has warned of major Iranian retaliation.

The markets turned risk-averse in Asia. The S&P 500 futures dipped by 0.5% and the anti-risk assets like gold and yen clocked multi-month highs against the US dollar. More importantly, US oil prices rose to $63.81 to print the highest level since May 1.

The euro, however, barely moved in Asia and is currently sidelined around 1.1170.

Looking forward, the investors could put a haven bid under the euro, as the European Central Bank is running a zero interest rate policy and the common currency is backed by a solid Eurozone trade surplus.

EUR/USD will likely extend Thursday's decline if the German data prints below estimates. The data, due at 08:55 GMT, is expected to show the seasonally adjusted jobless rate remained unchanged at 5% and the economy added 2,000 jobs in December.

Meanwhile, the cost of living, as represented by the consumer price index, is forecasted to have risen by 0.5% month-on-month in December, following a 0.8 % contraction in November. The inflation data is scheduled for release at 13:00 GMT.

Technical levels