Traders await ECB policy guidance and potential US-Iran escalation, capping moves in the currency pair near term.
EUR/USD remains rangebound as markets brace for the European Central Bank’s policy announcement and monitor rising US-Iran tensions. The dollar faces limited downside despite soft US inflation data, with Fed rate hike odds for July at just 15% but September probabilities above 60%.
The ECB is expected to keep rates unchanged but adopt a hawkish stance amid geopolitical risks. Markets price 43 bps of tightening by year-end, with a 75% chance of a September hike. Lagarde’s press conference will be key for euro direction.
Trump’s impending decision on Iran—either a 10-day ceasefire or full-scale conflict—could sway the dollar sharply. A ceasefire may weaken the greenback, while escalation would likely boost it.