EUR/USD rose on Thursday after early losses, as the US Dollar weakened despite stronger US data and cautious risk mood linked to US–Iran tensions. The pair traded near 1.1714 after touching 1.1679, while the US Dollar Index sat around 98.57 after an intraday high of 98.80.
US activity data improved in April. The S&P Global Manufacturing PMI rose to 54 from 52.3, a 47-month high, and the Services PMI increased to 51.3 from 49.8, a two-month high, both above forecasts.
Us Data And Dollar Reaction
US Initial Jobless Claims climbed to 214K for the week ending April 18, versus 212K expected and 208K prior. The Dollar did not extend gains after the PMI releases, with price action described as technical.
Tensions centred on the Strait of Hormuz continued to affect markets. Donald Trump posted that the US has “total control” over the strait and said he ordered the Navy to “shoot any boat putting mines in Hormuz”, adding it is “sealed up tight” until Iran makes a deal.
Iran maintained demands for the naval blockade to be removed, calling it a ceasefire violation. Mohammad Bagher Ghalibaf said reopening Hormuz would be “impossible” while alleged ceasefire breaches continued.
With a dual blockade and supply disruption, oil prices stayed high and inflation risks remained in focus. Markets priced in possible ECB rate rises and expected the Fed to hold rates.
Then Versus Now In Markets
Looking back to this time in 2025, we saw EUR/USD trying to hold the 1.1700 level amid significant geopolitical tension. Today, the situation is quite different, with the pair trading much lower around 1.0750. The US Dollar Index reflects this strength, sitting near 105.80 compared to the 98.50s we were watching last year.
The intense US-Iran standoff in the Strait of Hormuz that worried us in 2025 has fortunately eased, following a diplomatic resolution late last year. This de-escalation has helped bring down some of the risk premium in energy markets. WTI crude oil prices have stabilized around $82 a barrel, a notable change from the supply disruption fears that kept prices elevated.
Last year we saw US manufacturing PMI hit a remarkable 47-month high of 54, signaling powerful expansion. While the latest S&P Global Manufacturing PMI reading for April 2026 has moderated slightly to 51.9, it still shows the factory sector is expanding comfortably. This indicates a durable, though less super-charged, economic backdrop.
The market’s view on central banks has completely flipped since we were analyzing this in 2025. Back then, we were pricing in potential ECB hikes while the Fed was expected to hold. Now, with Eurozone inflation cooling faster than in the US, traders are betting the ECB will cut rates by June, well before the Federal Reserve even considers a move.
This policy divergence suggests traders should consider strategies that benefit from a stronger dollar and weaker euro in the coming weeks. Buying EUR/USD put options could offer a way to profit from further downside while clearly defining risk. Selling out-of-the-money call options is another approach to collect premium if the pair remains capped.
