EUR/USD rebounds as Trump's Iran truce push tumbles the US Dollar
- EUR/USD rises 0.37% to 1.1613 after rebounding from lows near 1.1484.
- Trump's five-day truce announcement boosted risk appetite and pressured the US Dollar.
- Falling Oil prices and lower yields offset lingering fears over Strait of Hormuz disruptions.
The Euro recovers some ground versus the US Dollar on Monday, up by 0.37%, after US President Donald Trump announced a five-day truce following productive talks between Tehran and Washington, as revealed on his social network. The EUR/USD trades at 1.1613 after bouncing off daily lows near 1.1484.
Euro climbs as easing war fears hit Oil, Treasury yields and the Greenback
Geopolitics remain in the driver's seat, relegating economic data to the sidelines. Over the weekend, US President Donald Trump announced that the US will obliterate Iran if it were reluctant to open the Strait of Hormuz. Tehran escalated the conflict, launching two intermediate-range ballistic missiles at Diego Garcia's island in the Indian Ocean, suggesting it's capable of longer-distance attacks, putting Central Europe within reach.
Before Wall Street opened, Trump de-escalated the conflict, saying that "I am pleased to report that the USA, and the country of Iran, have had, over the last two days, very good and productive talks.
Although Iran's media disputed Trump's statement, Pakistani Media revealed that Iran's Parliamentary Speaker Ghalibaf discussed the Strait of Hormuz issue with US officials in Islamabad.
The improvement in risk appetite sent US equity markets rallying, US Treasury yields falling, and Oil prices plunging. The US Dollar tumbled due to its positive correlation with Western Texas Intermediate (WTI), the US Crude Oil benchmark.
The US Dollar Index (DXY), which measures the value of the US dollar versus six others, is down 0.37% at 99.13, after hitting a daily high of 100.14.
Despite this, CBS reported that US officials said that the Strait of Hormuz is dotted with about a dozen Iranian mines.
An absent economic docket on both sides of the Atlantic left traders adrift on comments by Fed officials. San Francisco Fed President Mary Daly said that heightened global uncertainty—specifically the Middle East conflict—made the scenario analysis more relevant than relying on a single baseline economic outlook.
She drew two scenarios for the US economy. In the first one, geopolitical tensions ease quickly, leading to a downward correction in energy prices and a one-time inflationary jump that could be temporary.
On the second one, Daly warned that a prolonged conflict could change the macroeconomic scenario, as sustained disruptions to energy supply could trigger sustained inflation while weighing on economic activity.
Chicago Federal Reserve President Austan Goolsbee said at its best, the inflation progress had stalled, and the Fed is waiting for that to go away. He remains optimistic that rates may decrease by the end of 2026 and that inflation is the primary risk.
On Monday, Federal Reserve Governor Stephen Miran stated that it is premature to determine the impact of the energy price shock resulting from the Iran conflict on inflation. He added that he continues to believe interest rate reductions are appropriate to bolster the labour market.
Fed and the ECB keep rates steady
Last week, major central banks, including the Federal Reserve and the European Central Bank, delivered hawkish holds amid a jump in energy prices.
In the case of the Federal Reserve, the swaps markets scaled back dovish bets, and they're not expecting a rate reduction this year.
Currently, the probability of a rate hike by the European Central Bank (ECB) at the April 30 meeting stands at nearly 64%. According to Reuters, sources indicated that policymakers may discuss potential interest rate increases if the Middle East conflict persists.
For the June meeting, the odds are higher at 74%, as investors have priced in nearly 35 basis points of increases, according to Prime Market Terminal.
Euro Price This Month
The table below shows the percentage change of Euro (EUR) against listed major currencies this month. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.61% | 0.43% | 1.43% | 0.33% | 1.40% | 2.15% | 1.57% | |
| EUR | -1.61% | -1.15% | -0.20% | -1.26% | -0.20% | 0.54% | -0.04% | |
| GBP | -0.43% | 1.15% | 0.98% | -0.11% | 0.95% | 1.71% | 1.14% | |
| JPY | -1.43% | 0.20% | -0.98% | -1.06% | -0.01% | 0.72% | 0.17% | |
| CAD | -0.33% | 1.26% | 0.11% | 1.06% | 1.06% | 1.81% | 1.26% | |
| AUD | -1.40% | 0.20% | -0.95% | 0.01% | -1.06% | 0.74% | 0.20% | |
| NZD | -2.15% | -0.54% | -1.71% | -0.72% | -1.81% | -0.74% | -0.55% | |
| CHF | -1.57% | 0.04% | -1.14% | -0.17% | -1.26% | -0.20% | 0.55% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
EUR/USD Price Forecast: Technical Outlook
In the daily chart, EUR/USD trades at 1.1614. The near-term bias is mildly bearish as spot holds below the descending resistance trend line drawn from 1.2086, while price remains capped under the clustered simple moving averages around 1.1730, which now act as an overhead barrier. The latest RSI reading near 48 stays under the 50 midline after rebounding from oversold territory seen below 30 in recent sessions, indicating that bearish pressure has eased but upside momentum is not yet established.
Initial resistance emerges at 1.1640, aligning with the broken area inside the downtrend, followed by 1.1690 and the moving average zone near 1.1730, where the broader bearish structure would be challenged on a daily close above. On the downside, immediate support is seen at 1.1570, ahead of 1.1510, with a deeper floor near 1.1420; a break through these levels would reopen the downtrend and expose further weakness.
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
