EUR/USD is experiencing slight declines, hovering around 1.1410 in the early hours of Tuesday’s Asian session. The United States has initiated new military actions against Iran, while the Houthis have declared a maritime embargo. Market participants perceive a diminished likelihood of an interest rate increase during the Federal Reserve’s July meeting. The EUR/USD pair experiences slight declines, hovering around 1.1410 in the early hours of trading on Tuesday in the Asian market. Renewed tensions between the United States and Iran persist in fostering a risk-off sentiment, exerting downward pressure on the Euro against the US Dollar. The ZEW surveys from Germany and the Eurozone are scheduled for release later on Tuesday. Additionally, the US ADP employment report is set to be released.
The Guardian reported that the US has initiated the 10th round of attacks against Iran on Tuesday. The US military reported that it had targeted “military command centres, air defence and coastal surveillance sites, maritime capabilities, missile and drone launch sites, and communications networks.” Iran initiated assaults on Bahrain and Kuwait, alongside targeting tankers in the Strait of Hormuz. Meanwhile, Yemen’s Iran-backed Houthi rebels have declared a maritime embargo against Saudi Arabia. Escalating tensions and fears of broader conflicts in the Middle East may enhance the appeal of a safe-haven currency like the Greenback, potentially serving as a headwind for the major pair in the short term.
Conversely, indications of easing inflation in the United States could diminish the likelihood of an interest rate increase in the near term. This, in turn, could undermine the US dollar. Markets maintain an expectation of stability in rates at the Federal Reserve’s upcoming meeting on July 29, as Fed funds futures indicate an implied probability of 84.5% for a hold, a notable increase from the 61.5% odds observed a month prior, as per the CME FedWatch tool.