Iran risks, hawkish Fed support dollar

The EURUSD pair struggles to capitalise on the previous day’s bounce from the 1.1585-1.1580 region, or its lowest level since April 7, and seesaws between tepid gains and minor losses during the Asian session on Thursday. Spot prices, however, manage to hold above the 1.1600 mark as traders await further developments surrounding the Middle East crisis. Despite renewed hopes for a de-escalation in the Iran conflict, investors remain skeptical about a US-Iran peace deal amid major disagreements over Tehran’s nuclear programme and a standoff over the critical Strait of Hormuz. Furthermore, hawkish FOMC Minutes reaffirmed bets for an interest rate hike in 2026, which helps limit the dollar’s corrective pullback from a six-week low and acts as a headwind for the EURUSD pair. EURJPY flatlines as traders eye intervention risks The EURJPY 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 might support the yen and act as a headwind for the cross. Japan’s Q1 GDP beat forecasts, growing at an annualised rate of 2.1% against the estimated 1.7%. On the other hand, hawkish comments from the European Central Bank policymakers could lift the Euro 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 a 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. (Source: OANDA) The post Iran risks, hawkish Fed support dollar appeared first on Financial Mirror.