Geopolitical tensions and Fed policy remarks weigh on EUR/USD, with the pair trading near 1.1600 amid Middle East risks.
EUR/USD remains steady around 1.1600 in Asian trading after modest losses, as heightened Middle East tensions bolster the USD. President Trump’s threat to resume strikes on Iran in the coming days has fueled risk aversion, pressuring the euro.
The pair previously traded lower as investors weighed Tehran’s proposal to end the US-Israeli conflict against escalating rhetoric. An Iranian official warned of a resolute response to any US aggression. Meanwhile, Fed’s Paulson described current policy as mildly restrictive, supporting inflation control without disrupting labor markets.
ECB policymakers, including Martin Kocher, signaled potential rate hikes if the Hormuz Strait closure persists, offering some support to the EUR. Markets await further developments in both geopolitical and monetary policy fronts.