EUR/USD Strengthens, Dollar Pressured by Iran and Fed Diplomacy Issues
The EUR/USD pair strengthened slightly on Thursday (April 16th) and held just above 1.1800, extending its rally to nine days. This movement was driven by market optimism regarding the possibility of a new round of US-Iran negotiations, prompting investors to reduce their safe-haven positions in the dollar and bringing the pair back to pre-war levels.
US President Donald Trump stated that indirect negotiations with Tehran were still ongoing and suggested peace talks could resume within days. Trump also stated that Israel and Lebanon would soon begin "direct talks," which the market viewed as an additional factor that could help build a framework for regional stability and strengthen expectations of de-escalation.
On the other hand, pressure on the dollar also came from domestic US factors, following the re-escalation of tensions between Trump and Federal Reserve Chairman Jerome Powell. This issue raised market concerns about the central bank's independence, which could weaken the dollar's appeal amidst improving risk sentiment.
Trump has threatened to remove Powell from his separate seat on the Board of Governors if he does not step down when his term as Fed Chair ends. Powell's term as Fed Chair ends May 15, while his term as a member of the Board of Governors runs until 2028. A combination of easing geopolitical factors and increasing institutional uncertainty in the US are the main drivers of the euro's strengthening against the dollar in the latest market narrative. (asd)
Source: Newsmaker.id
