EUR/USD Seesaws Near July Lows as Trump Rejects Iran Proposal
The EUR/USD pair is trading near its lowest level since July 28 and seems to be consolidating above 1.1350, but still appears vulnerable as the US Dollar stays bullish.
US President Donald Trump rejected an Iranian proposal to end fighting and reopen the Strait of Hormuz immediately on meeting their terms, which has not helped alleviate tensions in the region.
The broader fundamental backdrop seems tilted in favor of USD bulls, suggesting that the path of least resistance for the EUR/USD pair is to the downside. The US Federal Reserve's projection of another rate increase by the end of this year, following a 25 basis points hike earlier this month, continues to push US bond yields to multi-year highs.
This supports the USD's position near a two-month high and validates the negative outlook for the EUR/USD pair. Meanwhile, European Central Bank President Christine Lagarde told a European Parliament committee that a measured policy response remains appropriate, pushing back on market bets for a more aggressive rate-hiking cycle.