Euro bounces off weekly low vs USD on Israel-Lebanon truce; upside seems limited
- EUR/USD recovers slightly from the weekly low as the Israel-Lebanon truce undermines the USD.
- The uncertainty over US-Iran peace talks and renewed hostilities in the Gulf might cap optimism.
- Hawkish Fed expectations should help limit deeper USD losses and keep a lid on spot prices.
The EUR/USD pair shows some resilience below the 1.1600 round figure and attracts some buyers during the Asian session on Thursday, reversing a part of the previous day's slide to the weekly through. Any meaningful appreciation, however, still seems elusive amid the uncertainty over US-Iran talks and ahead of the US Nonfarm Payrolls (NFP) report, due on Friday.
Lebanon and Israel agreed to implement a ceasefire following negotiations in Washington, easing concerns about a broader conflict in the Middle East. This keeps a lid on the safe-haven US Dollar (USD), which, in turn, is seen as a key factor acting as a tailwind for the EUR/USD pair. Furthermore, rising bets for a 25 basis point (bps) interest rate hike by the European Central Bank (ECB) later this month support the shared currency and spot prices.
Meanwhile, the optimism remains capped amid the lack of progress in US-Iran peace negotiations and renewed hostilities in the Gulf. The US military said on Tuesday that it had successfully repelled multiple Iranian missiles and drones launched at Kuwait and Bahrain, and had conducted self-defense strikes on Qeshm Island in response to the attacks. Meanwhile, Iranian armed forces targeted the US military bases in Bahrain in retaliation for the strike on Qeshm.
This keeps geopolitical risks in play, assisting Crude Oil prices to preserve the weekly gains registered over the past three days and reviving inflationary concerns. Investors seem convinced that major central banks, including the US Federal Reserve (Fed), will stick to a hawkish stance in the wake of the war-driven rise in energy prices. According to the CME Group's FedWatch Tool, traders are assigning a 50% chance that the Fed will hike interest rates by the end of this year.
The outlook, along with Iran tensions, should continue to underpin the safe-haven USD, warranting some caution before placing aggressive bullish bets around the EUR/USD pair. Traders might also opt to wait for the release of the closely-watched US monthly employment details – popularly known as the NFP report – for further cues about the Fed's policy path. This, in turn, will influence the USD price dynamics and provide some meaningful impetus to the currency pair.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.05% | -0.11% | -0.01% | 0.03% | -0.06% | -0.11% | |
| EUR | 0.08% | 0.00% | -0.02% | 0.06% | 0.08% | -0.09% | -0.04% | |
| GBP | 0.05% | -0.01% | -0.04% | 0.05% | 0.08% | -0.10% | -0.06% | |
| JPY | 0.11% | 0.02% | 0.04% | 0.08% | 0.12% | -0.07% | -0.01% | |
| CAD | 0.01% | -0.06% | -0.05% | -0.08% | 0.04% | -0.15% | -0.11% | |
| AUD | -0.03% | -0.08% | -0.08% | -0.12% | -0.04% | -0.17% | -0.11% | |
| NZD | 0.06% | 0.09% | 0.10% | 0.07% | 0.15% | 0.17% | 0.03% | |
| CHF | 0.11% | 0.04% | 0.06% | 0.01% | 0.11% | 0.11% | -0.03% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
