The EUR/USD pair remained resilient on Tuesday, trading near 1.1640 after reaching an intraday high around 1.1655. The common currency found support from stronger Eurozone inflation figures, while uncertainty surrounding US-Iran negotiations prevented the US Dollar from extending its recent gains.

Market sentiment was shaped by conflicting reports regarding diplomatic talks between Washington and Tehran. Iranian media suggested that communication between both sides had been temporarily suspended due to disagreements over a proposed memorandum of understanding. However, US officials painted a more optimistic picture, with President Donald Trump stating that negotiations were progressing quickly and that a broader agreement could potentially be reached within the coming week.

Despite the positive rhetoric, key issues remain unresolved. US officials continue to insist on the reopening of the Strait of Hormuz and progress regarding Iran’s highly enriched uranium stockpiles before any final agreement can be achieved. These sticking points have limited expectations for a near-term breakthrough and helped maintain underlying support for the US Dollar.

The Euro received a boost from inflation data released across the Eurozone. The Harmonized Index of Consumer Prices (HICP) rose 3.2% year-over-year in May, matching market expectations and accelerating from April’s 3.0% reading. Core inflation, which excludes volatile food and energy prices, climbed to 2.5% from 2.2%, indicating that underlying price pressures remain persistent.

The stronger inflation figures reinforced expectations that the European Central Bank (ECB) may adopt a more hawkish stance in upcoming meetings. Comments from Olli Rehn suggesting the possibility of an “insurance hike” further strengthened market expectations for tighter monetary policy.

Meanwhile, US economic data continued to demonstrate labor market resilience. JOLTS Job Openings rose sharply to 7.618 million in April, well above forecasts and significantly higher than March’s revised reading. The data supports the view that the Federal Reserve can afford to remain patient on interest-rate decisions.

Investors now await Wednesday’s ADP Employment Change report and Friday’s Nonfarm Payrolls release, which could provide crucial clues regarding the Federal Reserve’s policy path and determine the next major move in EUR/USD.

Trade Idea:
Buy EUR/USD above 1.1640 targeting 1.1700 and 1.1740. A break below 1.1600 would weaken bullish momentum and expose support near 1.1550.