What To Know
- EUR/USD and GBP/USD are trading in a wait-and-see environment driven by geopolitical headlines from the Middle East.
- The U.S. 10-year yield remains a key driver, with rising yields likely to support further dollar strength.
- EUR/USD is consolidating between 1.18–1.1850 resistance, with downside risk toward the 1.1680 (50-day EMA).
- GBP/USD is showing relatively stronger price action, holding above key support and attracting dip-buying interest.
- Market direction will likely depend on outcomes from U.S.–Iran talks in Islamabad and broader risk sentiment shifts.
EUR/USD
Traders continue to look at this as a market that quite frankly I think will continue to be very hesitant to put a lot of money into the market until we get some type of resolution coming from the talks today in Islamabad between the United States and Iran. With this, we have seen the US dollar pick up a little bit of strength early during the day, but I don't know that I read too much into that other than the possibility that we are just in an area that traders aren't comfortable buying the euro up against resistance nor are they willing to throw a lot of money into the pound. So, a little bit of hesitation. I'd watch the 10-year yield in America. If it starts to rise rapidly, that's your signal that the US dollar probably takes off.
So, looking at the euro itself, it seems to be in a state of flux. I think we see this as a market that is very driven by risk appetite and that risk appetite will have a lot to do with what happens with these talks. I'm a little hesitant to get too aggressive one way or the other, but I'd watch the area between 1.18 and 1.1850. If we can blow through there, then I think the euro goes much higher. If we break down from here, the 50-day EMA will be your next target at 1.1680 or so.
GBP/USD
The British pound is a little bit different in so much as it has pulled back to support and it seems to be holding it. So, you might even make the argument that shorting the euro against the pound could be the way to go. But as things stand right now, we are just simply waiting to find out if we get good or bad news. I think that's going to be the case going forward and once we get through the talks, if it's good news, the pound should rally towards the 1.36 level. If it's bad news, meaning that the Americans and the Iranians are about to start shooting at each other again, one would have to think the US dollar more likely than not picks up strength and we go looking towards the 50-day EMA at 1.3421. Right now we are almost in a wait and see type of mode but clearly the market wants to buy the British pound.
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