The Euro (EUR) eased from a one-week high against the US Dollar (USD) on Friday, with EUR/USD trading around 1.1433 after touching 1.1460 earlier in the Asian session. This pullback occurred as traders assessed ongoing developments in the Middle East and the US Dollar rebounded on safe-haven demand [1]. US President Donald Trump stated on Truth Social that Iran had requested to continue talks and the United States had agreed, but emphasized that Washington had informed Tehran the ceasefire was 'over.' This followed a series of military strikes exchanged between the US and Iran after Iran's Islamic Revolutionary Guard Corps (IRGC) attacked commercial vessels in the Strait of Hormuz earlier in the week. Additionally, Reuters reported that Qatari mediators are in Iran for talks aimed at facilitating broader negotiations [1].
The US Dollar Index (DXY) rose to 100.85 after rebounding from an intraday low of 100.60, reflecting increased demand for the Greenback as a safe-haven asset amid geopolitical uncertainty [1]. Market expectations for continued restrictive monetary policy from the Federal Reserve (Fed) also supported the USD. According to the CME FedWatch Tool, there is currently a 58% probability of a Fed rate hike at the September meeting. Simultaneously, traders anticipate that the European Central Bank (ECB) will raise interest rates again later this year [1].
Looking ahead, market participants are focused on next week's final Eurozone inflation data and the US Consumer Price Index (CPI) for further guidance on the interest rate outlook. Societe Generale noted that EUR/USD has staged a modest rebound after finding support near 1.1325, but the recovery lacks strong bullish confirmation. The bank identified the 1.1475-1.1500 zone as key resistance, while a break below 1.1390 could signal a revival of the broader downtrend [1].
The Core Harmonized Index of Consumer Prices (HICP) for the Eurozone, a key inflation indicator, is scheduled for release on Friday, July 17, 2026, with the previous monthly reading at 0.2%. The consensus forecast for the upcoming release is not available [1].
CONCLUSION
The Euro's retreat from its recent high reflects heightened geopolitical risks and expectations of continued restrictive monetary policy from the Fed, which have boosted the US Dollar. Market participants are now awaiting key inflation data from both the Eurozone and the US for further direction. The outlook for EUR/USD remains cautious, with technical resistance and support levels closely watched by analysts.