The EUR/USD pair has softened to approximately 1.1540 during the early Asian session on Wednesday. The US initiated military strikes against Iran in response to the incident involving the downed helicopter. The ECB is anticipated to increase interest rates during its monetary policy meeting on Thursday. The EUR/USD pair experiences a decline in momentum, approaching 1.1540 in the early Asian session on Wednesday. Renewed tensions in the Middle East following the US attack on Iran have led to a depreciation of the Euro against the US Dollar.
Traders prepare for the release of the US May Consumer Price Index inflation data, scheduled for later on Wednesday. US officials indicated early Wednesday that the second round of strikes in Iran is currently underway, focusing on air defence and radar systems, according to source. This action occurred as Washington initiated retaliatory strikes against Iran on Tuesday, characterising it as a proportional response to the downing of a US helicopter gunship near the Strait of Hormuz the previous day.
Indicators of escalating tensions between the US and Iran may enhance the appeal of the Greenback as a safe-haven asset, potentially posing challenges for the major pair in the short term. However, expectations that the European Central Bank would raise rates at its June policy meeting on Thursday may serve to constrain the depreciation of the shared currency. At its 11 June meeting, the ECB is very likely to raise its key interest rates by 25 basis points, in line with its recent hawkish communication’, stated Martin Wolburg.