Euro pares gains as traders seek clarity on US-Iran talks, Fed monetary policy
EUR/USD trades in a narrow range on Monday as traders await clarity on US-Iran negotiations, while signs of stabilization in the US Dollar following the recent intervention-led weakness cap the Euro’s upside.
The Euro trades around 1.1515 on Monday as market participants await clarity on US-Iran negotiations, which have caused some uncertainty in the geopolitical landscape. The pair reached a high of 1.1558 during the day, its highest level since June 17. Iranian Foreign Ministry spokesperson Esmaeil Baghaei confirmed that no talks are currently underway with Washington, while US President Donald Trump announced he had called off a planned strike on Iran. The conflicting headlines leave traders cautious and focus on other economic indicators.
US data shows a slight improvement in the manufacturing sector, with the ISM Manufacturing PMI rising to 55.6 in July from 53.3 in June, beating expectations. However, the Eurozone Manufacturing PMI remained steady at 51.9, just below the market forecast of 52.0. This mixed economic data adds to the uncertainty surrounding the Euro.
Meanwhile, the US Dollar Index (DXY) has rebounded from an intraday low of 99.42, trading around 99.84. Economists at DBS note that the greenback's outlook appears uncertain in August, given factors such as the Federal Reserve's reluctance to hike interest rates, coordinated currency interventions by the US and Japan, and a cooling geopolitical situation in the Middle East. Fed Chairman Kevin Warsh's focus on institutional reforms, rather than rate hikes, has unsettled investors who had bet on his hawkish stance.
Looking ahead, traders will closely monitor US employment data, with the JOLTS Job Openings report due on Tuesday, followed by ADP Employment Change on Wednesday and Nonfarm Payrolls (NFP) on Friday. Nonfarm Payrolls, which measures the change in employment in the US, is a key indicator for the Federal Reserve's policy decisions.
A higher NFP figure typically supports the US Dollar, while a lower figure could weaken it. Gold, which often moves inversely to the USD, has gained some momentum after its recent dip, but may struggle to capitalize on the upward trend due to the strength of the US Dollar.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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