The EUR/USD pair remained resilient above the 1.1500 level on Tuesday as investors monitored ongoing negotiations between the United States and Iran while awaiting key US labor market data later this week. The currency pair found support despite a mixed performance from the US Dollar, with traders balancing geopolitical developments against shifting expectations for monetary policy.
Market sentiment improved after US Treasury Secretary Scott Bessent stated that discussions between Washington and Tehran were progressing, suggesting that an agreement to reopen the Strait of Hormuz could be finalized as early as Tuesday or Wednesday. Additional optimism emerged after Al Arabiya, citing a senior source, reported that an official announcement regarding the reopening of the strategically important shipping route could be made soon.
The prospect of renewed maritime access weighed heavily on crude oil prices. West Texas Intermediate (WTI) crude dropped toward $75.50 per barrel, marking its lowest level in nearly three weeks. Lower oil prices eased concerns over inflation, reducing expectations that central banks will need to maintain restrictive monetary policies for an extended period.
Although the US Dollar initially weakened following the headlines, it later recovered some losses as uncertainty remained over whether a final agreement would be reached. US Secretary of State Marco Rubio confirmed that constructive talks involving Iran and Oman had taken place to facilitate increased shipping through the Strait of Hormuz but emphasized that negotiations were still ongoing. Consequently, the US Dollar Index (DXY) remained broadly stable around 99.90.
Economic data also influenced market sentiment. The latest JOLTS Job Openings report showed vacancies declined to 7.359 million in June from 7.594 million, falling below the market expectation of 7.4 million. Investors are now turning their attention to Wednesday’s ADP Employment Change report and Friday’s closely watched Nonfarm Payrolls (NFP) release, both of which could significantly influence expectations for future Federal Reserve policy.
Analysts at ING believe EUR/USD is currently trading around 0.5% to 1% above its estimated fair value. While they view this as only a modest overvaluation, they argue that additional gains would likely require a more dovish repricing of Federal Reserve interest-rate expectations. Their base-case outlook anticipates the pair slipping back below 1.1500 as the US Dollar stabilizes, although they do not expect a decline toward 1.1400 unless upcoming US employment data significantly exceeds forecasts.
Trade Idea:
Consider selling EUR/USD below 1.1500, targeting 1.1450–1.1420, with a stop-loss above 1.1545, as a steadier US Dollar could limit further upside unless US jobs data disappoints.