The EUR/USD pair traded steadily near 1.1385 on Monday in Europe as investors were cautious before economic events and news about US-Iran. People are closely watching the European Central Banks forum and the talks between the US and Iran.
The US Dollar stayed strong after people thought the Federal Reserve might not cut interest rates much as expected. Federal Reserve Chair Kevin Warsh sounded hawkish making investors think the US might keep interest rates high which increased demand for the US Dollar.
Tensions in the Middle East are still a focus. Irans Foreign Minister Abbas Araghchi said the Strait of Hormuz is under Irans control. Warned that blocking it could increase tensions.. News that the US and Iran agreed to pause military actions and talk in Doha, Qatar on Tuesday improved market sentiment. This temporary easing of tensions reduced demand for safe-haven assets. Did not eliminate worries about global energy supplies.
Now attention is on European Central Bank President Christine Lagarde, who will speak at the ECBs forum. Investors will analyze her comments for clues about interest rates and inflation in the Eurozone. If she suggests policymakers are cautious about easing policy it might support the euro.
This week traders will also focus on the US June employment report, which will shape expectations for the Federal Reserves policy decision. Strong labor market data might strengthen the US Dollar while weak data might support the EUR/USD pair.
Market Outlook
EUR/USD trades below 1.1400. Easing US-Iran tensions have improved market confidence. The US Dollar stays supported by expectations of Federal Reserve policy. The pair will likely stay range-bound until traders hear from Christine Lagarde and see the US employment data. A move above 1.1400 could lead to resistance levels. A break, below 1.1350 may put the pair under downside pressure.
