The EUR/USD pair moves higher on Wednesday, supported by improving market sentiment as optimism builds around a possible US–Iran agreement. The pair trades near 1.1750, gaining roughly 0.5% on the day after reaching an intraday high close to 1.1796, its strongest level in nearly two weeks.
The Euro finds support after reports suggested that Washington and Tehran are making progress toward a deal that could bring an end to the conflict and lay the groundwork for future nuclear negotiations. According to the proposal, Iran may pause uranium enrichment in exchange for sanctions relief and access to frozen financial assets. Additionally, both sides could agree to lift restrictions around the Strait of Hormuz, a key global energy route.
This development triggered a sharp decline in oil prices, easing inflation concerns and pushing US Treasury yields lower. As a result, expectations for further tightening by the Federal Reserve have softened, with markets once again considering potential rate cuts later this year. The shift in policy expectations has weighed on the US Dollar and helped lift the EUR/USD pair.
However, the rally remains fragile. Donald Trump warned that military action could resume if Iran fails to accept the terms of the deal, while Iranian sources have questioned the credibility of the proposal, calling parts of it unrealistic. This ongoing uncertainty has allowed the US Dollar to recover slightly from earlier losses, limiting further upside in the pair.
On the economic front, US data provided some support to the Greenback. The ADP report showed stronger-than-expected job growth in April, highlighting continued resilience in the labor market. Meanwhile, St. Louis Fed President Alberto Musalem emphasized that inflation remains above target and may require a prolonged period of restrictive policy.
Looking ahead, traders will closely monitor geopolitical headlines alongside key US labor data, including Jobless Claims and the upcoming Nonfarm Payrolls report, for fresh direction.
Trade Idea
Buy above 1.1800 targeting 1.1870, or sell below 1.1700 aiming 1.1620. Watch US data and geopolitical headlines, as both could trigger sharp volatility in either direction.