- The US-Iran ceasefire sent the EURUSD to 1.17.
- They will be attentive to developments in the talks between Washington and Tehran.
The US dollar was hit by a wave of selling following reports of a two-week truce between Washington and Tehran. And although Middle Eastern countries continue to report attacks by Iran, and Israel has no intention of stopping its attacks on Lebanon, EUR/USD posted its best rally since late January. Investors, driven by FOMO (fear of missing out), briefly pushed the euro above the 1.17 level.
Markets shoot first and ask questions later. The war had caused oil prices and the US dollar to rise, while US stock indices fell steadily. The ceasefire turned yesterday's winners into losers and the losers into favorites. The dollar is losing ground as tensions ease. At the same time, the futures market has increased the odds of a Fed rate cut in 2026 from 12% to 44%.
It is unclear whether Donald Trump has resolved the conflict in the Middle East. The differences between the opposing sides have not disappeared. Iran claims victory in the conflict, while the United States says it has achieved and even exceeded its goals. For now, markets are trying to determine who the most misleading claims are and are waiting for signals from the April 10 direct talks.
It is well known how Donald Trump conducts negotiations. The threat tactic has not disappeared, which could be perceived as an escalation of the geopolitical conflict and could cause a decline in the EURUSD. However, Iran and the United States have already taken the first step and, coupled with the drop in oil prices, this offers hope that the euro will continue to rise.
The decline in the dollar and US Treasury yields has allowed gold to recover. The precious metal has surpassed $4,800 an ounce on renewed hopes for a cut in the federal funds rate and the return of funds previously withdrawn to meet margin requirements on securities.
He FxPro Analyst team
