Euro Gains Slightly, Fading Hopes for US-Iran Talks Support Dollar
The euro (EUR) recorded a slight gain against the US dollar (USD) on Wednesday, but its movement remained stuck near the bottom of its range from the past few days. The EUR/USD pair held around 1.1750, with market participants assessing the chances of a positive outcome from US-Iran peace negotiations are fading.
Sentiment returned to caution after US President Donald Trump unilaterally extended the ceasefire until negotiations with Iran are completed, but the blockade of the Strait of Hormuz remains in place. Iranian authorities viewed the move as an act of war and a violation of the fragile ceasefire, so the risk of escalation remains a factor in dollar movements.
From Tehran, uncertainty about its attendance at the next round of talks also dampened market optimism. Several media reports suggested Iran's Revolutionary Guard Corps (IRGC) had increased its rhetoric against the US, increasing demand for safe-haven assets and supporting the dollar. EUR/USD itself fell nearly 0.4% on Tuesday as Middle East sentiment worsened and the dollar strengthened.
The dollar's strengthening was also supported by domestic US factors, namely optimistic retail sales data and convincing testimony from Fed Chair nominee Kevin Warsh in his Senate confirmation hearing. The combination of geopolitical uncertainty and expectations of tight US interest rates has limited room for the euro to strengthen, with market focus now on developments in Hormuz, the certainty of the negotiation schedule, and the Fed's next policy signals. (gn)
Source: Newsmaker.id
