Initially, markets priced in a positive scenario for EUR/USD. But a deterioration in rhetoric, combined with oil prices above pre-conflict levels, pushed the market into volatility.
EURUSD
Source: Marketaux
The US dollar held relatively steady during Monday's session as President Trump reaffirmed the administration's strong negotiating stance, stating the US will 'end up with a great deal.' S&P 500 futures, initially up 15 points, drifted approximately 10 points lower during the interview, reflecting cautious market sentiment. Trump's reference to targeting Dow 50,000 underscores his continued use of equity markets as a performance benchmark, which indirectly influences dollar sentiment through risk appetite channels. The comments lacked specific policy details, leaving traders without fresh catalysts for directional USD moves. The dollar index remains range-bound as markets await concrete developments on trade negotiations. Near-term, USD pairs are likely to consolidate within recent ranges, with traders monitoring upcoming trade-related headlines for clarity. Risk sentiment remains the primary driver, and any escalation or de-escalation in negotiations could trigger sharp moves across major pairs. Traders should watch for follow-through in equity futures as a leading indicator for broader FX positioning.
USDJPY
EURUSD
Sentiment:
Neutral
Source: Finnhub
GBP/USD and USD/JPY are the two key trades to watch during Monday's session, with both pairs approaching technically significant levels. The British pound has been supported by resilient UK economic data and expectations that the Bank of England will maintain a more hawkish stance relative to the Federal Reserve, keeping GBP/USD bid near recent highs. Meanwhile, USD/JPY continues to face downward pressure as the Bank of Japan signals potential further policy normalization, while safe-haven yen demand remains elevated amid global uncertainty. For GBP/USD, traders are watching for a sustained break above recent resistance, which could open the door to further upside. USD/JPY is testing key support, and a decisive break lower would confirm bearish momentum driven by narrowing US-Japan yield differentials. Both pairs reflect broader dollar vulnerability as markets reassess the Fed's rate trajectory. Traders should monitor upcoming UK retail sales data and Japanese inflation figures for additional directional cues this week.
GBPUSD
USDJPY
Sentiment:
Neutral
Source: Marketaux
EUR/USD has closed its recent price gap but is struggling to generate upward momentum, reflecting a market caught between conflicting forces. The pair remains under pressure as traders weigh deteriorating Eurozone economic sentiment against broader dollar dynamics. Germany's ZEW economic sentiment index plunged to -17.2 in April, far worse than the -5.0 consensus, marking the lowest reading since December 2022. The sharp decline in investor confidence is largely attributed to the ongoing US-Iran geopolitical conflict, which has driven energy prices higher and weighed on European economic prospects. The euro's inability to sustain gains after filling the gap suggests underlying bearish pressure remains intact. With the ECB potentially reassessing its policy stance amid worsening economic conditions and elevated energy costs, traders should monitor whether the pair can hold current levels. Near-term resistance is likely capped around the gap-fill level, while a failure to build on the recovery could see EUR/USD retesting recent lows. The pair's direction will hinge on upcoming Eurozone data and geopolitical developments.
EURUSD
Sentiment:
Negative
Source: Marketaux
Germany's April ZEW economic sentiment index collapsed to -17.2, dramatically undershooting the -5.0 market expectation and dropping sharply from the prior reading of -0.5. This marks the worst reading since December 2022, delivering a significant blow to euro sentiment. Current conditions also deteriorated notably, falling to -73.7 versus -70.0 expected and -62.9 previously. The severe downturn in German investor morale is primarily driven by the fallout from the US-Iran conflict, which has sent energy prices surging across Europe. Although natural gas prices have eased somewhat in recent weeks, the damage to business confidence and broader economic activity is already reverberating through multiple sectors of the German economy. The data underscores the Eurozone's vulnerability to external geopolitical shocks, particularly through the energy channel. For EUR/USD traders, this reading adds to bearish pressure on the euro, as weakening growth prospects may force the ECB to maintain or increase accommodative measures. The release reinforces the narrative of economic fragility in Europe's largest economy and could weigh on euro crosses more broadly.
EURUSD
Sentiment:
Very Negative
Source: Finnhub
GBP/USD is under notable selling pressure as the pound faces a dual headwind from escalating geopolitical tensions and rising domestic political uncertainty. The pair has declined as traders reduce exposure to sterling amid a deteriorating global risk environment linked to the ongoing US-Iran conflict, which has boosted crude oil prices and strengthened safe-haven demand for the US dollar. On the domestic front, UK political risks are adding to the bearish case for the pound, with market participants growing increasingly concerned about policy direction and governance stability. Rising oil prices present a particular challenge for the UK economy, as higher energy costs threaten to reignite inflationary pressures while simultaneously weighing on consumer spending and economic growth — a stagflationary scenario that complicates the Bank of England's policy calculus. Traders should watch for key support levels, with any breach potentially accelerating the move lower. Near-term direction will depend on developments in geopolitical tensions and upcoming UK economic releases. The combination of external and internal risks suggests further downside vulnerability for GBP/USD.
GBPUSD
Sentiment:
Negative
Source: Marketaux
NZD/USD is positioning for a potential breakout as building inflation risks in New Zealand support the kiwi dollar against its US counterpart. The pair is showing constructive technical price action, with traders eyeing key resistance levels that could trigger an accelerated move higher if breached. Rising inflation expectations in New Zealand are a core driver, as persistent price pressures may compel the Reserve Bank of New Zealand to maintain a hawkish stance or delay any anticipated rate cuts, which would be supportive of NZD yield differentials. The inflation dynamic contrasts with a US dollar that has faced intermittent selling pressure amid mixed domestic data and shifting Federal Reserve rate expectations. From a technical perspective, NZD/USD appears to be consolidating near breakout territory, with a decisive move above resistance likely to attract momentum buyers and open the path to higher levels. However, traders should remain cautious of external risks, including global risk sentiment shifts tied to geopolitical developments that could trigger safe-haven USD flows. Near-term support is well-defined, providing a favorable risk-reward setup for bulls watching this pair closely.
NZDUSD
Sentiment:
Positive
Source: Marketaux
The US dollar is trading cautiously as geopolitical tensions between the United States and Iran dominate market sentiment, with Tehran maintaining a de facto closure of the Strait of Hormuz since the weekend. This critical chokepoint handles approximately 20% of global oil supply, and the disruption has pushed crude prices higher, weighing on risk appetite and creating cross-currents for USD pairs. Safe-haven flows have supported JPY and CHF, while commodity-linked currencies such as CAD have found modest support from elevated oil prices. Tehran officials are holding a hard line in their negotiating position ahead of anticipated US-Iran talks, adding uncertainty to the outlook. Markets are caught between cautious optimism that diplomatic progress could ease tensions and the risk of further escalation. Traders should monitor USD/JPY and USD/CHF for safe-haven demand signals, while keeping an eye on USD/CAD as oil price volatility intensifies. Near-term direction hinges on headline developments from diplomatic channels, making position sizing and risk management critical in the current environment.
USDJPY
USDCHF
USDCAD
Sentiment:
Neutral
Source: Finnhub
