Euro hesitates below 1.1650 as US-Iran tensions escalate

EUR/USD is wavering without a clear bias, with upside attempts limited below 1.1650.
Fresh US attacks on Iran have undermined hopes of a swift end to the war.
ECB's Lane has shown supportive to the idea of further monetary tightening.

Guillermo Alcala FXStreet

The Euro (EUR) remains flat against the US Dollar (USD) for the second consecutive day on Tuesday, trading at 1.1645 at the time of writing, after bouncing up from 1.1624 highs. The pair is lacking a clear direction this week, with investors wary of taking excessive risks, awaiting clarity from the US-Iran conflict.

Market sentiment suffered a setback on Tuesday, amid news reporting US attacks on military targets in Southern Iran, which have been considered “defensive" by US authorities. Iran’s Supreme Leader, Mojtaba Khamenei, said on Telegram that the US will no longer have a haven in the Gulf region.
Markets, however, are latching onto hopes of a negotiated end to the war as Tehran and Washington discuss the latest proposal to end the war and reopen the Strait of Hormuz. This is keeping US Dollar recoveries limited for now and Oil prices below the key $100 level.

In Europe, the European Central Bank (ECB) Chief Economist Philippe Lane has shown comfortable with market expectations of higher interest rates in an interview with Nikkei on Tuesday. Lane added that the bank “expects indirect effects beyond energy prices,” feeding expectation of a rate hike in June or July.

Later on Tuesday, the US Conference Board will release its May Consumer Confidence report, and the Dallas Federal Reserve (Fed) will disclose the latest Manufacturing Business Survey. The focus this week, however, will remain on Thursday’s Personal Consumption Expenditures (PCE) Price Index, which will shed further light on the Fed’s rate path.

Economic Indicator

Consumer Confidence

The Consumer Confidence index, released on a monthly basis by the Conference Board, is a survey gauging sentiment among consumers in the United States, reflecting prevailing business conditions and likely developments for the months ahead. The report details consumer attitudes, buying intentions, vacation plans and consumer expectations for inflation, labor market, stock prices and interest rates. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish. Note: Because of restrictions from the Conference Board, FXStreet Economic Calendar does not provide this indicator's figures.

Economic Indicator

Dallas Fed Manufacturing Business Index

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state's factory activity. Firms are asked by Federal Reserve Bank of Dallas whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase.

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