EUR/USD struggles for traction as markets remain cautious on US-Iran talks

The Euro (EUR) trims part of its earlier gains against the US Dollar (USD) on Monday, as stalled US-Iran peace talks keep market sentiment fragile and limit downside in the Greenback.

At the time of writing, EUR/USD is trading around 1.1723 after hitting an intraday high of 1.1755. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.47 after touching an intraday low of 98.22.

The modest downside in the US Dollar comes as US-Iran headlines continue to drive price action. Earlier in the day, a report by Axios, citing a US official and two sources familiar with the matter, said Iran has presented a new proposal to the United States to reopen the Strait of Hormuz and end the war, while leaving nuclear negotiations for a later stage.

However, uncertainty remains, as Washington has yet to respond to the proposal. The plan is unlikely to be accepted by US President Donald Trump, who has repeatedly said that curbing Iran’s nuclear program is a key condition for any deal.

Attention is also turning to upcoming central bank meetings later this week, with both the Federal Reserve (Fed) and the European Central Bank (ECB) widely expected to keep interest rates unchanged amid rising inflation risks linked to elevated Oil prices.

In the daily chart, EUR/USD maintains a mildly bullish near-term bias as prices show signs of stabilization above the 50-, 100-, and 200-day Simple Moving Averages (SMAs). The clustering of these SMAs between roughly 1.1650 and 1.1710 suggests a supportive base beneath the market, while the Relative Strength Index (RSI) around 55 points to constructive but not overstretched momentum.

The Moving Average Convergence Divergence (MACD) has eased back toward the zero line, hinting that upside pressure is moderating rather than reversing at this stage. The Average Directional Index (ADX) near 24 suggests a modest trend strength.

On the downside, a break below this cluster of moving averages could expose the next support near 1.1600. On the upside, resistance is seen around the 1.1800 level.

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Editorial note: This recovered market brief has been cleaned and reclassified by Next Move Markets for educational market intelligence. It is not investment advice.

Next Move Markets desk view

For active traders, this brief should be read through the lens of currency markets rather than as a standalone headline. The key question is whether the theme behind EUR/USD struggles for traction as markets remain cautious on US-Iran talks can influence positioning beyond the first reaction. That means watching central-bank expectations, yield differentials, dollar momentum and risk appetite together, not in isolation.

A richer trading read comes from separating the catalyst from confirmation. The catalyst explains why markets are paying attention; confirmation comes from price action, liquidity and cross-asset behavior after the headline is digested. If those signals do not align, traders should treat the move as fragile and keep risk tighter.

What traders should watch next

• Whether the move is confirmed by the U.S. dollar index and short-term rate expectations.
• How London and New York liquidity react once the initial headline risk is absorbed.
• Whether price action respects the latest support and resistance zones instead of fading immediately.
• Any follow-up comments from central-bank officials or data releases that change the rate path.

Risk context

This article is a market-intelligence brief, not a trade recommendation. Before acting on the theme, traders should define invalidation, position size and the time horizon of the setup. The same headline can support a short-term reaction and still fail as a multi-session trend if liquidity, policy expectations or broader sentiment move the other way.

Scenario map

The base case is that traders keep this theme on the radar while waiting for confirmation from central-bank expectations, yield differentials, dollar momentum and risk appetite. A stronger continuation scenario requires follow-through after the first reaction, preferably with related assets moving in the same direction. A failure scenario develops if the headline is quickly absorbed, volatility fades and price returns inside the previous range.

For currency markets, the most useful approach is to compare the article theme with live market behavior. If the market confirms the narrative, pullbacks can become more constructive. If the market rejects it, the headline becomes background noise rather than a trading driver.

Execution discipline

• Define the level first: traders should know where the idea is invalidated before thinking about upside or downside.
• Separate news from setup: EUR/USD struggles for traction as markets remain cautious on US-Iran talks may explain attention, but entry quality still depends on timing, liquidity and risk/reward.
• Watch confirmation: a clean move usually appears across related markets, not only in one isolated instrument.
• Control exposure: if volatility expands, smaller position sizing can be more professional than chasing the headline.

Next Move Markets treats this kind of brief as a starting point for preparation: identify the driver, map the scenarios, then wait for the market to prove which path is actually being priced.