EUR/USD Under Pressure, Geopolitical Risks Support Dollar
EUR/USD weakened below 1.1700 in early Asian trading on Friday (April 10), as market participants prepared for the release of US inflation figures for March and monitored developments in US-Iran peace talks. The currency pair traded around 1.1690, with the US dollar again supported by cautious sentiment.
The euro's weakening occurred amid market doubts about the durability of the two-week ceasefire between the US and Iran. Uncertainty regarding the implementation of the agreement has made investors tend to be defensive, especially ahead of a diplomatic agenda considered high-risk for regional stability.
Iranian Foreign Ministry spokesman Esmaeil Baghaei said the continuation of negotiations to end the war depends on US compliance with its ceasefire commitments. He stated that these commitments include a ceasefire in Lebanon, while the US and Israel have emphasized that Lebanon is not included in the agreement.
The US is said to be preparing a series of talks in Pakistan this week, with Vice President JD Vance and senior envoys Steve Witkoff and Jared Kushner, to discuss a potential long-term agreement with Iran. Although the two-week pause in hostilities is considered "largely" intact, tensions remain high after Israeli Prime Minister Benjamin Netanyahu stated that Israel will "continue to strike Hezbollah with force."
Data-wise, the market's primary focus on Friday is the US CPI for March. Headline inflation is projected to rise to 3.3% year-on-year (yoy) from 2.4% in February, driven by rising oil prices amid the conflict in the Middle East; a weaker-than-expected reading could weigh on the dollar against the euro.
In Europe, the European Central Bank's (ECB) policy tone is said to be hawkish, signaling the possibility of further tightening if price pressures persist. According to Reuters, the market is now fully pricing in two interest rate hikes, as well as a more than 50% chance of a third hike in December, which is cushioning the euro's weakness but will still be tested by the direction of US inflation data and geopolitical developments. (asd)
Source: Newsmaker.id
