EUR/USD traded near 1.1590 in early Asian hours on Thursday, staying below 1.1600. Trading was cautious ahead of a speech by US President Donald Trump on the Iran war and US weekly Initial Jobless Claims due later on Thursday, with US Nonfarm Payrolls due on Friday. Trump is due to speak at 01:00 GMT on Thursday to give an update on the war with Iran. It follows the first joint US-Israeli strikes on Iran in late February, and a White House official said he is expected to cite US military successes and repeat a two- to three-week timeline to end the operation.

Euro Trading And Market Share

Markets have priced a 76% chance of a 25-basis-point European Central Bank rate rise by June 2026, according to Reuters. Some major banks, including J.P. Morgan and Barclays, have updated forecasts to allow for up to three rate rises this year. The Euro is used by 20 EU countries in the Eurozone and was 31% of global foreign exchange transactions in 2022, with average daily turnover above $2.2 trillion. EUR/USD accounts for about 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). The ECB in Frankfurt sets policy, meets eight times a year, and targets price stability, including a 2% inflation goal measured by HICP. Germany, France, Italy and Spain make up 75% of the Eurozone economy, and trade balance outcomes can affect the currency. The market is quiet now, holding below 1.1600, but we expect a spike in volatility around President Trump’s address. If he signals a clear and swift end to the Iran conflict as anticipated, we could see a “risk-on” move that weakens the US Dollar. This would likely push EUR/USD through the 1.1600 resistance level. Beyond the speech, our focus immediately shifts to tomorrow’s US Nonfarm Payrolls report. After February’s surprisingly strong print of 275,000, which we saw in early March 2026, analysts are forecasting a more moderate gain of 190,000 for March. A number significantly above this consensus could strengthen the Dollar and cap any rally in EUR/USD, regardless of the geopolitical news.

Policy Divergence And Strategy

The bigger picture for us is the clear hawkish shift from the European Central Bank. With Eurozone HICP inflation stubbornly holding at 2.8% in the latest March 2026 reading, the market is right to price in a high probability of a rate hike by June. This policy divergence, especially after the Fed paused its own hiking cycle back in late 2025, provides a strong underlying bid for the Euro. Given this outlook, we believe buying call options on EUR/USD with expirations in the next three to six months is a prudent strategy. This allows us to position for a potential move towards 1.1800 or higher, driven by ECB rate hikes, while capping our downside risk through the immediate event volatility. Looking at historical patterns, we saw a similar policy divergence in 2021 that led to a sustained trend, which could be a roadmap for the rest of 2026. Create your live VT Markets account and start trading now.

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