|

Euro climbs beyond 1.1400 as renewed Iran diplomacy hopes undermine safe-haven USD

  • EUR/USD kicks off the new week on a positive note as US-Iran diplomacy hopes weigh on the USD.
  • Falling oil prices ease inflation fears and temper Fed rate hike bets, further undermining the buck.
  • Traders, however, seem hesitant as the focus remains on the crucial FOMC policy meeting this week.

The EUR/USD pair builds on a modest bullish gap opening and climbs back above the 1.1400 mark during the Asian session on Monday. The intraday move up is sponsored by a broadly weaker US Dollar (USD), weighed down by renewed optimism over a diplomatic resolution to end a five-month-old US-Iran war.

The US paused its bombing campaign following 13 consecutive nights of strikes on Iranian targets late on Friday, prompting Tehran to suspend its retaliatory attacks against Washington's allies in the Middle East. US ambassador to the United Nations (UN) Mike Waltz said that while forces remained locked and loaded, President Donald Trump wants to give negotiations a little bit of room. This, in turn, boosts investors' sentiment and undermines the safe-haven Greenback.

Meanwhile, the easing in hostilities triggers a sharp fall in crude oil prices and eases inflationary concerns, tempering US Federal Reserve (Fed) rate hike expectations. This turns out to be another factor that drags the USD Index (DXY), which tracks the buck against a basket of currencies, away from the vicinity of the monthly high retested last week. Traders, however, might refrain from placing aggressive bets on the EUR/USD pair ahead of the key central bank event risk.

The US central bank is scheduled to announce its policy decision at the end of a two-day meeting on Wednesday. Traders will look for fresh cues about the future policy path, which will play a key role in influencing the near-term USD price dynamics. Apart from this, the focus will be on further developments surrounding the Middle East crisis, which would further drive the USD demand and produce some meaningful trading opportunities around the EUR/USD pair.

According to TD Securities, the FOMC is expected to leave policy steady, with the bank stating, “We expect the FOMC to keep rates unchanged.” The team acknowledges that “higher oil prices driven by Middle East tensions have increased inflation risks and strengthened the case for a rate hike,” but they argue that “more evidence is needed to win majority support.” In their view, “hawkish momentum is building,” yet Chair Warsh is “unlikely to provide guidance,” and they anticipate “two dissents from Hammack and Logan.”

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 Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.36%-0.24%-0.18%-0.13%-0.27%-0.24%-0.46%
EUR0.36%0.09%0.15%0.21%0.08%0.13%-0.12%
GBP0.24%-0.09%0.07%0.13%-0.00%0.00%-0.20%
JPY0.18%-0.15%-0.07%0.02%-0.09%-0.07%-0.27%
CAD0.13%-0.21%-0.13%-0.02%-0.12%-0.10%-0.32%
AUD0.27%-0.08%0.00%0.09%0.12%0.05%-0.20%
NZD0.24%-0.13%-0.01%0.07%0.10%-0.05%-0.25%
CHF0.46%0.12%0.20%0.27%0.32%0.20%0.25%

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

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

GBP/USD defends 1.3300 after strong UK PMI data

Following Thursday's sharp decline, GBP/USD clings to small gains above 1.3300 in the American session on Friday, supported by the upbeat UK Retail Sales and July PMI data. Nevertheless, the pair's upside remains capped as investors cling to a cautious stance amid a further escalation of tensions in the Middle East. The US July PMI data failed to trigger relevant price action.

EUR/USD climbs beyond 1.1400 as renewed Iran diplomacy hopes undermine safe-haven USD

The EUR/USD pair builds on a modest bullish gap opening and climbs back above the 1.1400 mark during the Asian session on Monday. The intraday move up is sponsored by a broadly weaker US Dollar, weighed down by renewed optimism over a diplomatic resolution to end a five-month-old US-Iran war.

Gold reclaims $4,100 os Iran diplomacy hopes temper Fed hike bets and weigh on USD

Gold looks set to build on a modest bullish gap-up opening on Monday, beyond $4,100, as hopes of US-Iran peace talks weigh heavily on crude oil prices, easing inflation fears and tempering Fed rate-hike bets. Moreover, the optimism drags the safe-haven US Dollar away from a one-month top, touched on Friday, and supports the non-yielding bullion. The focus now shifts to the crucial FOMC policy meeting this week.

Week ahead: Fed, BoE and BoJ face inflation test as markets reprice interest rate paths
The US dollar gained against the other major currencies this week amid the escalating tensions in the Middle East as well as US President Trump’s decision to proceed with a new round of tariffs after previously imposed levies expired.
Australian Dollar outlook: Chances of another rally won’t be decided in Canberra, but in Washington

The Australian Dollar rode a rollercoaster in the first half of the year, hitting a four-year high and then correcting. The currency enters the second half with an outlook full of uncertainty due to renewed hostilities in the Middle East, which clouds the inflation outlook and interest rates.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?
The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.