EUR/USD Rises, US Dollar Pressured by US-Iran Peace Hopes
EUR/USD started the week with gains and returned above the 1.1400 level during the Asian session on Monday (July 27). This increase was driven by a weakening US dollar following renewed hopes for diplomatic efforts to defuse the five-month-long US-Iran war.
Market sentiment improved after the United States temporarily halted its attack campaign against Iran on Friday night, following 13 consecutive nights of attacks on Iranian targets. Tehran was also reported to have suspended retaliatory strikes against Washington's allies in the Middle East, weakening demand for the dollar as a safe-haven asset.
The easing of tensions also pressured crude oil prices and helped ease inflation concerns. This has slightly reduced expectations for a Federal Reserve interest rate hike, causing the US dollar index to move away from the monthly highs it tested last week.
However, market participants remain cautious ahead of the Fed's monetary policy decision this week. The US central bank is scheduled to announce the minutes of its two-day meeting on Wednesday, with the market awaiting further clues regarding the future direction of interest rates.
In terms of market impact, EUR/USD has the potential to remain supported as long as the US dollar weakens and oil prices continue to fall. However, the euro's strength could be restrained if the Fed signals a hawkish stance or if Middle East tensions escalate. The market's primary focus now is on the FOMC outcome, comments by Fed Chairman Kevin Warsh, and developments in US-Iran diplomacy. (asd)
Source: Newsmaker.id
