The euro fell close to the 1.15 mark after losing some recent gains. This drop came as rising tensions between Israel and Iran boosted the US dollar, which is now seen again as a safe haven currency after some time.
The euro had a strong two-day rally, partly fueled by market worries over President Donald Trump’s unpredictable policies. However, the recent Israeli airstrike on Iranian nuclear sites has raised fears of a wider conflict, pushing investors toward the dollar for safety.
US Treasury yields have eased slightly, with the 10-year bond yield dropping below 4.40%. Still, yields remain high compared to the Federal Reserve’s base rate.
Despite a brief rise above 1.16, the EUR/USD exchange rate remains within a familiar range of 1.10 to 1.16. The chances of the euro breaking higher are growing, but a sustained climb to 1.20 seems unlikely without some market consolidation first.
Today, markets will watch the University of Michigan’s consumer confidence survey in the US, but geopolitical concerns are expected to dominate investor focus.
In summary, the euro’s recent rally has paused due to Middle East tensions, and the dollar has gained as a safe choice. The euro may test levels near 1.17 to 1.18 before any significant move higher.
