EUR/USD gave back part of its earlier rise on Monday as stalled US-Iran talks kept markets cautious and supported the US Dollar. The pair traded near 1.1723 after an intraday high of 1.1755.
The US Dollar Index (DXY) was around 98.47 after an intraday low of 98.22. Price moves were linked to fresh US-Iran headlines.
Us Iran Talks And Dollar Reaction
Axios reported that Iran has offered a proposal to reopen the Strait of Hormuz and end the war, while leaving nuclear talks for later. Washington has not yet responded, and US President Donald Trump has said limits on Iran’s nuclear programme are a condition for any deal.
Focus is also on this week’s Federal Reserve and European Central Bank meetings. Both are widely expected to keep interest rates unchanged, while higher Oil prices raise inflation concerns.
On the daily chart, EUR/USD remains mildly bullish, holding above the 50-, 100-, and 200-day simple moving averages. These averages cluster between about 1.1650 and 1.1710, with the RSI near 55.
MACD has moved back towards zero, and ADX is near 24. A drop below the moving-average zone could open 1.1600, while resistance sits near 1.1800.
From 2025 Backdrop To Current Market
We recall how fragile market sentiment was back in 2025, with stalled US-Iran talks keeping EUR/USD pinned around the 1.17 level. Today, the situation is vastly different, with the pair trading closer to 1.09 and the US Dollar Index (DXY) firm above 104, compared to the 98 level seen then. This highlights a significant shift in the underlying strength of the dollar.
The focus on both the Fed and ECB holding rates due to oil prices in 2025 now seems like a distant memory. Both central banks have since embarked on easing cycles, but the Federal Reserve is signaling a slower pace of cuts due to persistent US inflation, which is currently running at 2.9%. This policy divergence is a key reason for the dollar’s sustained strength and is creating opportunities in interest rate swaps.
The technical picture from last year suggested a stable base with modest momentum, which supported selling volatility through short straddles. However, the current environment is less certain, and implied volatility on one-month EUR/USD options has climbed to over 8%, up from the sub-6% levels we saw for much of 2025. This suggests traders should now consider buying options, like long strangles, to profit from a potential sharp move in either direction.
Those old support levels around 1.1650 are now a distant ceiling, with the market currently finding resistance near 1.1050. Traders are using this level to initiate bearish positions or buy put options, betting that the Fed’s cautious stance will keep a lid on any Euro rallies. A break below the year-to-date low of 1.0820 would likely trigger further downside momentum.
