- The Euro has reversed previous losses and trades higher, despite cautious market sentiment.
- Fears that Iran might retaliate after US attacks are likely to keep risk appetite subdued on Monday.
- Longer-term, EUR/USD remains in a bearish corrective channel from 1.1630 highs.
The EUR/USD pair gapped down at the week’s opening to regain lost ground shortly afterwards and is trading near the 1.1500 level on Monday’s European session. The pair, however, remains within its previous ranges, in a descending channel from mid-May highs, with investors wary of risk and awaiting Iran’s retaliation to the US attack.The United States launched massive strikes on three key nuclear sites in Iran, including the underground facility of Fordow, which, according to US President Donald Trump, has devastated Iran’s nuclear program. Further comments from Trump suggest that this has been a one-off action and that a wider escalation can be avoided if Tehran refrains from retaliation. The market reaction, so far, has been limited.Iran’s authorities have launched missiles at Israel, and its parliament approved the closure of the Strait of Hormuz, a key gateway to Oil transport, which might bring Crude prices to levels well beyond 100 per barrel. Iran has not attacked US interests in the region so far, but if this happens, it would be the trigger for a wider regional war.In the macroeconomic data front, the Eurozone HCOB PMI figures revealed that business activity remained steady in June, despite hopes of a moderate improvement. The focus now is on the European Central Bank (ECB) President Christine Lagarde’s introductory speech before the Committee of Economic and Monetary affairs (ECON) of the European Parliament.In the US, the preliminary June S&P Manufacturing and Services PMIs will be observed with interest to assess the momentum of the US economy, following a string of downbeat data over the previous two weeks.
