European currencies have moved into consolidation after a brief recovery, as traders remain cautious amid an uncertain geopolitical backdrop. Price action reflects a balance between a softer US dollar and limited momentum for further gains in the euro and pound, keeping both pairs range-bound.
Developments around Iran remain the main driver. Although global markets have stabilised somewhat and the dollar has eased, US rhetoric and the lack of clear progress towards a deal continue to cloud the outlook. Elevated oil prices and risks to supply via the Strait of Hormuz are sustaining inflation concerns, reinforcing a cautious stance on monetary policy expectations.
Uncertainty has also been fuelled by comments from Donald Trump, who signalled the possibility of further strikes on Iran. While diplomatic efforts continue, the chances of a near-term agreement appear low. This mix of tension and negotiation is limiting directional moves while leaving scope for volatility if the situation escalates.
EUR/USD
EUR/USD is trading within a tight 1.1500–1.1600 range. Technical signals point to a possible test of the upper boundary, supported by emerging reversal patterns on the daily chart. A break above 1.1600 could open the way towards 1.1640, while a drop below 1.1500 may lead to losses towards 1.1440–1.1410.
Key events for EUR/USD:
- 10:15 (GMT+3): Spain Services PMI
- 10:55 (GMT+3): Germany Services PMI
- 15:30 (GMT+3): US core durable goods orders
GBP/USD
GBP/USD is also trading sideways after a corrective rebound. A sustained move above 1.3300 may push the pair towards 1.3370–1.3400, while a downside rejection could see a retest of lows near 1.3150.
Key events for GBP/USD:
- 11:30 (GMT+3): UK Composite PMI
- 11:30 (GMT+3): UK Services PMI
- 17:00 (GMT+3): Atlanta Fed GDPNow
Overall, markets remain in a holding pattern, awaiting both geopolitical updates and key macro data. A breakout from current ranges may be driven by Iran-related developments or upcoming economic releases, underlining the transitional nature of current conditions.
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