Euro: Risk-off pressure persists against US Dollar – Danske Bank

FXStreet Insights Team FXStreet

Danske Research Team notes that risk sentiment has deteriorated after fresh United States (US) strikes on Iran, pushing EUR/USD below 1.16. The team highlights that higher Oil prices and yields are weighing on broader risk assets. They also flag upcoming US Personal Consumption Expenditures (PCE) Price Index data as important for FX markets, including EUR/USD.

Risk sentiment weighs on Euro

"Risk sentiment turned negative overnight on reports that the US has conducted new strikes on Iran. The EUR/USD has dropped below 1.16 and Brent oil rose from yesterday's low of USD 94.25 /bbl towards USD 98/bbl."

"In the euro area, the ECB publishes the minutes from its April meeting today. Given recent comments from Governing Council members, the minutes are likely to reflect increasingly hawkish discussions around further policy hikes."

"Also in the euro area, May business sentiment indicators are released, with particular attention on firms' selling price expectations, which saw the largest monthly increase in the survey's 25-year history last month. We are looking to see if the rising expectations continue."

"The figure increased 3.2% y/y in March, well above the Fed's 2% target, with markets expecting the price pressure to continue in the April figures. Also in the US, the second GDP estimate is released."

"In the US, the April PCE inflation figures will be released, which is the Fed's preferred gauge of underlying inflation in the US."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD bulls seem hesitant below 0.7050 ahead of RBA on Tuesday

AUD/USD reverses an Asian session dip on Monday as renewed optimism over Iran diplomacy boosts investor confidence, keeping a lid on the safe-haven US Dollar and supporting the risk-sensitive Aussie. Spot prices, however, remain below the one-month high, touched last Thursday, as bulls wait for the crucial RBA decision before taking fresh positions.

USD/JPY climbs to 158.00 neighborhood as BoJ uncertainty weighs on the JPY

The USD/JPY pair gains some positive traction at the start of a new week, recovering further from Friday's post-Bank of Japan (BoJ) swing low to sub-157.00 levels. The momentum lifts spot prices to the 158.00 neighborhood during the Asian session and seems unaffected by fresh intervention warning from Japan's Finance Minister Satsuki Katayama.

Gold recovers on positive US-Iran headlines

Gold extends its recovery during American trading hours on Monday, supported by falling Oil prices following positive headlines on US-Iran talks. The metal regains ground after hitting a fresh yearly low of $3,870 on Friday and ending October down 6.87%. However, the rebound lacks conviction as the fundamental backdrop continues to raise doubts over a sustained recovery.

Bitcoin braces for US midterm elections as historical sell-offs revive downside concerns

Bitcoin (BTC) braces for the impact of the US midterm elections, just a week after the $6 billion hack from Binance. Historically, congressional elections have negatively affected not just the president’s party but also Bitcoin. In the last 22 midterms, the ruling party has gained House seats only twice, while the three most recent elections coincided with Bitcoin’s bear market bottoms.

Why strong US growth could not stop the bond rally and AI selloff

The US economy grew at a 3.4% annual rate, yet Treasury yields fell and the Nasdaq ended October with its worst monthly performance since March 2025. The market is no longer rewarding capital expenditure simply because it supports growth. Investors are testing whether that expenditure can produce cash flow and returns above the cost of capital.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.