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Euro edges lower to near 1.1600 on US-Iran peace deal uncertainty

  • EUR/USD posts modest losses near 1.1615 in Friday’s early European session. 
  • Mixed signals on the progress of US-Iran ceasefire talks continued to keep traders cautious. 
  • The ECB June rate hike case is nearly sealed, but July is fully open, said Reuters.  

The EUR/USD pair trades with mild losses around 1.1615 during the early European trading hours on Friday. The Euro (EUR) remains weak against the US Dollar (USD) amid mixed headlines surrounding the US-Iran peace deal. Germany’s IFO surveys and Michigan Consumer Sentiment Index report will be released later in the day. 

Traders will closely monitor the progress of US-Iran ceasefire talks. Iranian officials said that the latest proposal from the US partly narrowed the gap between the warring sides, but comments from the Islamic Republic’s Supreme Leader about keeping Tehran’s uranium stockpile and a dispute over tolls in the Strait of Hormuz clouded the outlook for a breakthrough. 

On Wednesday, US President Donald Trump warned that he may resume attacks soon if Iran doesn’t agree to his terms. Any signs of a prolonged conflict or escalating tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair. 

The case for the European Central Bank (ECB) rate hike in June is nearly sealed, but the central bank is likely to be noncommittal about any further move, looking to temper bets for a quick follow-up step in July, according to Reuters. The ECB decided to hold the key interest rates steady ‌in April, but it debated a hike and signalled that a move in the June policy meeting was likely given persistently high energy costs.

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Euro weakens against British Pound ahead of Germany IFO Business Survey

  • EUR/GBP remains subdued as the Euro falls ahead of upcoming German economic indicators.
  • The Euro struggles as flash PMI data showed the Euro Area economy shrinking at its fastest pace since late 2023.
  • The May 2026 UK GfK Consumer Confidence Index rose to -23, beating estimates of -28 as household pessimism slightly eased.

EUR/GBP extends its winning streak for the fifth consecutive day, trading around 0.8650 during the Asian hours on Friday. The currency cross remains subdued as the Euro (EUR) struggles ahead of upcoming German economic indicators, including the June GfK Consumer Confidence Survey, Q1 GDP figures, and the IFO Business Survey, due later in the day.

The Euro faced significant challenges as traders reacted to a surprising contraction in the Eurozone economy. According to the latest S&P Global flash Purchasing Managers’ Index (PMI) data released on Thursday, the Euro Area economy shrank in May at its fastest pace since late 2023. This downturn was primarily driven by a conflict-fueled surge in living costs that stifled service demand and pushed input price inflation to a three-year high.

The downside of the EUR/GBP cross is retrained as the British Pound (GBP) inches lower following the GfK Consumer Confidence Index release, which edged up to -23 in May 2026 from -25 in the previous month, which had marked the lowest reading since October 2023 amid persistent worries about the Iran war. The result defied market estimates of -28, suggesting that households were slightly less pessimistic about the outlook. GfK consumer insights director Neil Bellamy cautioned that the uptick was unlikely to mark a sustained recovery in overall sentiment.

In contrast to the slight bump in consumer confidence, actual UK business activity weakened considerably. Thursday’s S&P Global Composite PMI for May contracted to 48.5 from 52.6, falling well below the market estimate of 51.7. This sharp decline serves as a clear indication that economic activity could shrink further under the weight of the Middle East conflict.

Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the UK economy is facing a perfect storm as rising political uncertainty adds to the growing impact from the war in the Middle East.

Despite these signs of economic slowing, the Bank of England (BoE) Monetary Policy Committee member landed firmly on the tightening side of the ledger, creating an awkward policy contrast against survey data that points to a stalling economy. BoE Governor Andrew Bailey also spoke during the session, but did not do much to shift the market needle.

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Euro struggles as rising hawkish Fed tone lifts USD

  • EUR/USD falls as a firm US Dollar gained support from rising expectations of a hawkish Federal Reserve stance.
  • President Trump will swear in Kevin Warsh as the US Federal Reserve chair on Friday at the White House.
  • The Euro fell as flash PMI data showed the Euro Area economy shrinking at its fastest pace since late 2023.

EUR/USD remains subdued for the second successive day, trading around 1.1610 during the Asian hours on Friday. The pair depreciates as the US Dollar (USD) remains firm, supported by rising odds of hawkish sentiment surrounding the Federal Reserve (Fed) policy stance.

Prolonged energy disruptions from the ongoing war threaten to feed into core US consumer prices and inflation expectations, which could potentially push the Fed to keep interest rates higher. Furthermore, a stronger US economic growth outlook is adding weight to the case for monetary tightening and boosting the Greenback.

Fed officials remain cautious as they evaluate whether to adjust short-term interest rates. While they are currently holding the federal funds rate steady, policymakers are moving away from the idea of rate cuts and are increasingly open to raising rates if inflation fails to cool down.

The administration of US President Donald Trump announced that Trump will swear in Kevin Warsh as the chair of the US Federal Reserve on Friday at the White House. The new chair succeeds Jerome Powell, whose term expired on Friday but who has continued to serve on a pro-tempore basis until the transition.

On the US data front, the Department of Labor (DOL) showed that Initial Jobless Claims fell by 3,000 to 209,000 during the second week of May, indicating continued resilience in the labor market. Meanwhile, Continuing Jobless Claims increased to 1,782,000 for the week ending May 9, up from 1,776,000 the previous week.

The Euro (EUR) struggles against the US Dollar (USD) as traders reacted to a surprising contraction in the Eurozone economy. According to the latest S&P Global flash PMI data release on Thursday, the Euro Area economy shrank in May at its fastest pace since late 2023, driven by a conflict-fueled surge in living costs that stifled service demand and pushed input price inflation to a three-year high.

Market attention now shifts to upcoming German economic indicators, including the June GfK Consumer Confidence Survey, Q1 GDP figures, and the IFO Business Survey.

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EUR/JPY Price Tests confluence resistance zone near 185.00

  • EUR/JPY tests the nine-day EMA of 184.76.
  • The 14-day Relative Strength Index around 47 indicates recent pullback is a consolidation.
  • Failing to break the wedge could push the spot down toward its three-month low near 181.87.

EUR/JPY remains flat for the second consecutive day, trading around 184.70 during the Asian hours on Friday. The technical analysis of the daily chart indicates the currency cross is positioned on the upper boundary of an emerging descending wedge pattern, indicating a potential for a bullish reversal.

However, the EUR/JPY cross is holding beneath both the nine-period and 50-period Exponential Moving Average (EMA), keeping the near-term bias capped despite the broader uptrend. The 14-day Relative Strength Index (RSI) sits around 47, pointing to neutral momentum and suggesting the recent pullback is consolidating rather than impulsive for now.

The immediate resistance lies at the confluence around nine-day EMA of 184.76, followed by the 50-day EMA at 184.85 and the upper boundary of the descending wedge. A successful break above this zone would support the EUR/JPY cross to explore the region around the all-time high of 187.95, which was recorded on April 17.

A failure to break the descending wedge would put downward pressure on the EUR/JPY cross to navigate the region around the three-month low of 181.87, recorded on March 16, followed by a five-month low of 180.81, which was reached on February 12.

Chart Analysis EUR/JPY
EUR/JPY: Daily Chart

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.08%0.06%0.03%0.11%0.21%0.08%0.06%
EUR-0.08%-0.02%-0.04%0.02%0.15%0.00%-0.04%
GBP-0.06%0.02%-0.04%0.05%0.15%0.03%-0.03%
JPY-0.03%0.04%0.04%0.09%0.17%0.04%-0.01%
CAD-0.11%-0.02%-0.05%-0.09%0.08%-0.05%-0.08%
AUD-0.21%-0.15%-0.15%-0.17%-0.08%-0.13%-0.19%
NZD-0.08%-0.01%-0.03%-0.04%0.05%0.13%-0.05%
CHF-0.06%0.04%0.03%0.00%0.08%0.19%0.05%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

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Euro: Growth worries cap upside against US Dollar – Rabobank

Rabobank’s Senior FX Strategist Jane Foley highlights that weak French and German PMI data have undermined Eurozone growth expectations and led markets to question how much the European Central Bank (ECB) can still tighten. Foley now sees risk of only one 25 bps ECB hike this year, arguing that slower Eurozone growth and energy-related headwinds will limit EUR/USD gains, keeping the pair below 1.20 in 2024.

Weak Eurozone data weighs on Euro

“The EUR reacted poorly to this morning’s shockingly poor French PMI release, with EUR/USD briefly dipping back below the 1.16 level. The preliminary data for May showed a sharp drop in the composite number to 43.5 from 47.6 the previous month, with weakness evident in both the manufacturing and the services sectors. The composite number, which is a 66-month low, would usually be associated with recession.”

“The data have caused the market to question whether the ECB needs to hike rates as much as has been expected to rein back demand in the face of the supply shock. This week’s releases of softer than expected UK and Australian labour data have had a similar impact on short-dated interest rates in their respective markets. Currently the market is priced for just over 50 bps of ECB policy tightening on a 6-month view.”

“In Rabo’s view, there is risk of just one 25 bps rate hike from the ECB this year. Further paring back of ECB rate hike expectations would undermine the value of the EUR.”

“In our view, any absence of positive news regarding a peace deal in the Iran war could still bring dips to the EUR/USD 1.15 area in the weeks ahead, with the USD likely to benefit from safe haven flows. Assuming a gradually reopening of the Strait of Hormuz in the month ahead, we expect EUR/USD to edge higher. However, faced with slower growth in the Eurozone, we do not expect a move to EUR/USD1.20 this year.”

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Currency Talk – EUR/USD, USD/CHF, USD/CAD

Key takeaways

  • What is the technical outlook for EURUSD, USDCHF and USDCAD?

EURUSD EURUSD prices have recently broken below the 1:1 uptrend, whose lower boundary was at 1.1650. According to the Overbalance methodology, this paves the way for the downtrend to extend, potentially as far as the low at 1.1420. Conversely, for a return to an uptrend, the price would first need to move back above the 1.1650 level, and ideally also break through the 1.1720 level, where the upper limit of the local 1:1 downtrend pattern is located.

EURUSD – H4 chart. Source: xStation USDCHF The USDCHF remains in a long-term downtrend. The price rebounded from a key resistance level at the end of March, leading to a decline of nearly 300 pips. Currently, attention should be paid to a local descending geometric pattern, for which resistance is at the 0.7914 level. Should this level be breached, the price could continue to rise towards the next resistance level at 0.8035. Only a sustained break above this higher level would suggest a shift in the balance of power on the chart. For the time being, however, the base case scenario remains a downtrend.

USDCHF – H4 chart. Source: xStation USDCAD The USDCAD pair shifted sentiment at the start of May, and since then we have seen a local uptrend, supported by a green 1:1 bullish pattern. Should a correction occur, the key support level remains at 1.3723. A break below this level could open the way for a decline towards 1.3630, where the polarity of the previously negated bearish pattern, marked in red, is located.

USDCAD – H4 timeframe. Source: xStation

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Euro: Downside focus against US Dollar tempered by rebound – UOB

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann maintain a cautious stance on EUR/USD after a dip to 1.1582 was followed by a strong rebound to 1.1644. While they still highlight 1.1570 as the key downside focus, they stress that slowing bearish momentum and positive divergence mean losses could be limited, with consolidation expected between 1.1600 and 1.1650 near term.

Euro consolidates as bearish momentum fades

“24-HOUR VIEW: EUR fell to a low of 1.1591 on Tuesday. When EUR was at 1.1610 in the early Asian trade yesterday, we indicated that EUR “could dip below 1.1590 and potentially test 1.1570 before the risk of a rebound increases.” We indicated that “resistance is at 1.1630, followed by 1.1645.” EUR subsequently dipped to a low of 1.1582 and then staged a surprisingly strong rebound during the NY session (high was 1.1644). Upward momentum is building, albeit not significantly. Today, instead of continuing to rise, EUR is more likely to consolidate between 1.1600 and 1.1650”

“1-3 WEEKS VIEW: We turned negative on EUR one week ago. After EUR dropped below 1.1600, we stated yesterday (20 May, spot at 1.1610) that “the focus is now at 1.1570.” We added, “while further declines below 1.1570 are not ruled out, the tentative slowing in short-term momentum, alongside early signs of positive divergence, suggests that the downside could be relatively limited.” We did not quite expect EUR to rebound strongly to 1.1644. Downward momentum has slowed further, and a breach of 1.1665 (no change in ‘strong resistance’ level) would indicate that 1.1570 is out of reach.”

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EUR/JPY Flatlines with neutral technical outlook as traders eye intervention risks

  • EUR/JPY holds steady near 184.75 in Thursday’s early European session. 
  • The cross keeps a neutral outlook, while RSI momentum hovers around the midline. 
  • The immediate resistance level emerges at 185.00; the initial support level to watch is 184.32. 

The EUR/JPY cross trades on a flat note around 184.75 during the early European session on Thursday. Markets remain cautious over further currency intervention after Japanese Finance Minister Satsuki Katayama stated that the official is prepared to take action at any time against excessive FX volatility. 

The stronger-than-expected Japanese Gross Domestic Product (GDP) growth for the first quarter (Q1) might support the Japanese Yen (JPY) and act as a headwind for the cross. Japan’s Q1 GDP beat forecasts, growing at an annualized rate of 2.1% against the estimated 1.7%.

On the other hand, hawkish comments from the European Central Bank (ECB) policymakers could lift the Euro (EUR) against the JPY. ECB policymaker Joachim ‌Nagel said on Tuesday that the central bank may have to act at its June meeting as the Iran energy shock proves persistent and the probability of broader inflation spreading continues to rise.

The majority of economists from the Reuters poll, around 85%, indicated that the ECB would raise its deposit rate by 25 basis points (bps) to 2.25% in June, up from just over half expecting that before the April meeting.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY is consolidating in a sideways tone, holding above the 100-day simple moving average (SMA) while trading just under the 20-day Bollinger mid-line, which keeps the immediate bias broadly neutral after the recent pullback from the highs. The Relative Strength Index (RSI) at 47 is hovering around the midline, hinting at a lack of directional conviction rather than strong selling pressure.

On the topside, initial resistance is located at the Bollinger mid-band around 185.00, with a stronger cap emerging at the May 12 high of 185.46 if bulls regain traction. The next hurdle to watch is the upper Bollinger band near 187.15. On the downside, the 100-day SMA at 184.32 offers first support, ahead of the May 7 low of 183.50. The critical support level is seen at the lower Bollinger band around 182.88, where a sustained break would likely expose a deeper correction.