The euro and the pound continue to strengthen as markets react to evolving geopolitical developments. The initial rally in EUR/USD and GBP/USD was driven by reports of a temporary ceasefire between the United States and Iran, which reduced demand for the US dollar as a safe-haven asset.
Over the weekend, however, headlines about stalled negotiations led to a bearish gap at the start of the week. Sentiment shifted again soon after, as renewed speculation about a possible resumption of talks supported risk appetite and helped European currencies recover their positions.
The rebound in the euro and sterling has also been accompanied by renewed weakness in the US dollar. Declining US Treasury yields and a reassessment of expectations for Federal Reserve policy continue to weigh on the greenback, limiting its upside potential.
Market participants are now focused on upcoming macroeconomic releases from the eurozone and the United States, including producer inflation, business activity data, and speeches from Federal Reserve officials. These events may reshape rate expectations and influence the dollar’s short-term direction.
EUR/USD
The pair continues to move higher after breaking out of last week’s consolidation range. Although the week opened with a gap lower, EUR/USD quickly rebounded after testing support at 1.1660 and returned above 1.1700. Technical indicators point to a potential move towards the 1.1800–1.1830 area. However, any негатив developments in US–Iran negotiations could trigger a pullback towards 1.1700–1.1660.
Key events for EUR/USD:
- today at 10:00 (GMT+3): Spain HICP
- today at 15:30 (GMT+3): US Producer Price Index (PPI)
- today at 20:00 (GMT+3): speech by Bundesbank representative Balz
GBP/USD
The pound is showing a similar pattern, largely mirroring the euro’s movement. Following the opening gap, the pair broke above last week’s highs and tested key resistance at 1.3500. Further gains towards 1.3570–1.3600 remain possible, while a downside correction could lead to a retest of the 1.3450–1.3470 zone.
Key events for GBP/USD:
- today at 11:50 (GMT+3): speech by Bank of England MPC member Mann
- today at 19:00 (GMT+3): speech by Bank of England Governor Bailey
- today at 19:45 (GMT+3): speech by Federal Reserve Vice Chair for Supervision Michael S. Barr
Overall, European currencies remain supported by improving risk sentiment and softer US yields. At the same time, the market remains highly sensitive to geopolitical headlines and incoming macroeconomic data, which could drive increased volatility in the near term.
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