EUR/USD Stuck in Neutral as Middle East Crisis and US Data Weigh
The EUR/USD pair has been trading in a narrow range around 1.1580, unable to find clear direction due to subdued demand for the US Dollar (USD). The lack of progress in the Middle East crisis and poor employment figures have contributed to this stability.
The Strait of Hormuz remains closed, with both Iran and the United States claiming control over it. However, traffic through the passage is severely disrupted, leading to higher Oil prices and concerns about inflation. US Treasury Secretary Scott Bessent has threatened Iran with economic isolation 'like the world has never seen before.'
The US Consumer Price Index (CPI) data released in July showed a decline in annual inflation to 3.4%, matching market expectations. This supported the case for an on-hold Federal Reserve (Fed) in September, limiting USD demand.
On the other hand, European Central Bank (ECB) hike odds stand at 90% according to the ECB Watch tool, as the Euro area's second estimate of Q2 GDP reported quarterly growth at 0.4%.