The Euro (EUR) heads lower against the Dollar (USD) on Tuesday, trading right below 1.1750 at the time of writing, after another rejection at the 1.1790 area on Monday.
Market concerns about the growing fragility of the US-Iran ceasefire are buoying the safe-haven US Dollar, which is drawing additional support from investors’ caution ahead of the US Consumer Price Index (CPI) release
Market sentiment soured on Tuesday following comments by US President Donald Trump affirming that the US-Iran ceasefire is on “life support”, and reports by the CNN news channel, citing some of his aides, stating that the US president is frustrated with the attitude of Iranian authorities and has brought the possibility of resuming combat operations back to the table. In the US session, however, the highlight of the day will be the US Consumer Price Index (CPI) release. Consumer inflation is expected to have accelerated to a 3.7% yearly rate in April, its highest level since September 2023, confirming the inflationary impact of the Middle East war.
Core inflation is seen rising to 2.7% year-on-year from 2.6% in March, with USD risk skewed to the upside, as higher-than-expected CPI figures might prompt more Federal Reserve Policymakers to jump on the hawkish side. In the Eurozone, the ZEW Economic Sentiment Index released earlier on Tuesday revealed that institutional investors’ feelings about the German economy improved to -10.2 in May from -17.2 in April, against expectations of further deterioration, to -19.8. The sentiment about the current economic situation, however, has dropped to five-month lows at -77.8, from -73.7 in April, below the -77.5 market consensus.