EUR/USD posted a modest gain of around 0.20% on Monday, recovering from overnight lows near 1.1730 to trade close to 1.1790 during the European session. Despite the uptick, the pair remains confined within Friday’s wide range after a volatile end to last week. Price action saw a sharp reversal from above 1.1840 to below 1.1780, and Monday’s movement reflects consolidation rather than a clear directional shift. Tight, indecisive candles during the Asian session highlighted hesitation among traders, while a gradual move higher into the London open brought the pair back toward the midpoint of the prior range.
Geopolitical developments remain a key driver. The fragile ceasefire between the United States and Iran is approaching its expiration without a confirmed agreement. Over the weekend, tensions escalated after US naval forces intercepted an Iranian vessel in the Gulf of Oman, while Iran tightened control over the Strait of Hormuz and reportedly targeted passing ships. Although Donald Trump suggested that talks could resume in Islamabad, Iranian officials denied any scheduled negotiations, increasing uncertainty around a diplomatic resolution.
Oil markets reacted strongly to the escalation, with West Texas Intermediate surging over 6% to trade above $89 per barrel. Rising energy prices continue to fuel inflation concerns, complicating the outlook for global central banks and adding another layer of uncertainty to currency markets.
Interestingly, despite heightened tensions, the US Dollar Index remains near six-week lows. This suggests that traders are still pricing in the possibility of de-escalation, even if that optimism appears increasingly fragile.
Looking ahead, the economic calendar is relatively quiet. Key data releases include US Retail Sales on Tuesday and flash Purchasing Managers’ Index (PMI) readings later in the week. These events could provide short-term direction, but for now, geopolitical headlines are likely to remain the dominant catalyst for EUR/USD price action.
Trade Idea:
Buy dips near 1.1740 targeting 1.1850. Weak USD bias persists, but geopolitical risks cap upside; trade range until a clear breakout driven by news or data.