EUR/USD Trends Amid U.S.-Iran Negotiations

The EUR/USD pair held steady around 1.1625 during early Asian trading on Thursday. However, the potential for major currency pairs to gain could face challenges due to the ongoing uncertainty regarding U.S.-Iran negotiations, which may drive investors toward safe-haven assets. Later today, preliminary Purchasing Managers’ Index (PMI) figures for May are expected from the euro area, Germany, and the United States.

On Wednesday, U.S. President Donald Trump indicated that talks with Iran were nearing conclusion but issued a warning of further attacks if Iran does not comply with the deal.

In response, Iranian President Masoud Pezeshkian downplayed suggestions of capitulation from his government and threatened retaliatory strikes across the Middle East if attacked. This rising tension between the U.S. and Iran could strengthen safe-haven currencies like the U.S. dollar (USD), potentially creating headwinds for major currency pairs.

Additionally, a hawkish stance from the U.S. Federal Reserve could boost the dollar. Minutes from the April meeting revealed that many officials believe a rate increase might be necessary if inflation persists above the 2% target.

A significant percentage of economists, about 85%, in a Reuters poll anticipate that the European Central Bank (ECB) will raise deposit rates by 25 basis points to 2.25% in June. This is a notable increase from just over half of those polled who expected a rise prior to the April meeting.