EUR/USD reverses its early gains on Monday and moves toward filling the bullish gap at the weekly open.
The pair initially rose after a temporary pause in attacks between the United States (US) and Iran improved risk sentiment, sent Oil prices sharply lower and weighed on the US Dollar (USD)
At the time of writing, EUR/USD trades around 1.1373, retreating from an intraday high of 1.1418. The initial optimism proved short-lived as US officials stressed that military action against Iran had not been ruled out. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said the Strait of Hormuz remained closed and added that there were currently no direct talks with the United States.
The lack of concrete negotiations keeps geopolitical risks alive, limiting the downside in both the US Dollar and Oil prices. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades near 101.46, recovering from an intraday low of 101.12. Meanwhile, softer-than-expected US Durable Goods Orders did little to stop the broad recovery in the US Dollar.