European currencies have regained some ground in recent sessions following an earlier decline, hinting at a potential shift in short-term momentum. The US dollar has eased from its highs as traders await key economic data from the United States, prompting a reassessment of positioning and opening the door for a deeper corrective move. Nevertheless, the dollar’s safe-haven appeal remains intact, especially given ongoing geopolitical uncertainty, which markets have already begun to factor in.
The euro and Swiss franc have also benefited from a temporary reduction in demand for the dollar as a defensive asset. While earlier geopolitical developments supported the greenback, recent remarks from Donald Trump about possible new strikes on Iran have renewed uncertainty. This could once again drive investors back towards the dollar if tensions escalate further.
Attention is now firmly on upcoming US macroeconomic releases, particularly labour market and trade figures. These indicators may signal early signs of a slowdown in economic activity, potentially weighing further on the dollar. At the same time, stronger-than-expected data combined with heightened geopolitical risks could quickly restore demand for the US currency and cap the current rebound in European currencies. Data from Europe and Switzerland will also be closely watched, as inflation and business activity figures may influence expectations for central bank policy and support the ongoing recovery if they come in favourably.
EUR/USD
EUR/USD has bounced decisively from recent lows at the start of the week. From a technical perspective, the pair may attempt another move towards the 1.1640 area, supported by a bullish engulfing pattern on the daily chart. However, failure to maintain levels above the 1.1500–1.1520 zone could pave the way for a renewed decline.
Key events for EUR/USD:
- today at 09:45 (GMT+3): France budget balance
- today at 15:30 (GMT+3): US initial jobless claims
- today at 15:30 (GMT+3): US trade balance
USD/CHF
USD/CHF is also retreating from its yearly highs, showing signs of a corrective move. The formation of an “evening star” pattern on the daily chart suggests a potential decline towards the 0.7850–0.7900 range. However, a sustained move above 0.8000 would negate this bearish outlook.
Key events for USD/CHF:
- today at 09:00 (GMT+3): Switzerland CPI
- today at 18:30 (GMT+3): Atlanta Fed GDPNow
- today at 19:45 (GMT+3): speech by FOMC member Michelle Bowman
In summary, the market appears to be transitioning from a phase of strong dollar appreciation into a period of consolidation and correction. Still, elevated geopolitical risks and upcoming economic data releases leave open the possibility of renewed strength in the US dollar.
