EUR/USD Rebounds as European Indices Recover After Iran Conflict Selloff

European equity indices staged a notable rebound on Wednesday after two consecutive sessions of sharp declines triggered by escalating geopolitical tensions surrounding the Iranian conflict. The selloff had erased gains made when major European indices reached new cycle highs late last week. The recovery in risk appetite is providing support to the euro, with EUR/USD stabilizing as markets reassess the geopolitical risk premium that had driven safe-haven flows into the US dollar, Japanese yen, and Swiss franc. The initial flight to safety had pressured European currencies broadly, but the rebound suggests markets may be pricing in a contained conflict scenario. Traders should monitor geopolitical developments closely, as any further escalation could reignite risk-off flows, strengthening traditional safe havens like the USD, JPY, and CHF at the expense of the euro and British pound. Near-term, EUR/USD faces resistance at pre-selloff highs, while support sits at the lows established during the two-day decline. Volatility is expected to remain elevated as headlines continue to drive sentiment.