- March 11, 2026
- Posted by: EWGFX
- Category: news
The EURUSD pair consolidates below the 1.1650 level as US-Iran war and oil prices continue to drive the price action. What’s next?
The US dollar weakened across the board on Monday after Trump told CBS that “the war could be over soon.” Traders unwound some of their positions as expectations of a quick resolution led to a repricing of hawkish interest-rate bets, putting pressure on the greenback.
The dollar extended those losses yesterday as improved risk sentiment added further downside pressure. However, the trend reversed in the evening following reports that US intelligence assets had detected signs Iran may be preparing to deploy mines in the Strait of Hormuz shipping lane. As the prospects of a quick resolution faded, US dollar bids returned.
Today, we have the US CPI report on the agenda. Given the market’s focus on the war, investors will likely shrug off a softer-than-expected reading, as the data may already be viewed as outdated. However, a hotter-than-expected report could trigger some risk aversion. Investors may worry that if inflation was already picking up before the war began, higher oil prices could push it even higher in the months ahead.
EUR:
On the EUR side, ECB policymakers continue to stress patience and caution against reacting too fast to Middle East events. Next week, we have the ECB policy decision where the central bank is expected to keep everything unchanged.
The market is pricing a 55% chance of a rate hike in June and what traders will be focused on is whether a rate hike is indeed on the table and what would be the scenario that could force the ECB to hike rates earlier than expected.
If the US-Iran war drags on though, a rate hike will likely weigh on the euro as it would add further pressure on stock markets and economic activity.