The EUR/USD currency pair remained stable around 1.1540 during the early Asian session on Tuesday, as traders closely watched developments related to US President Donald Trump's deadline concerning the reopening of the Strait of Hormuz [1]. President Trump stated on Monday that the latest US ceasefire proposal with Iran was 'not good enough' and threatened to target Iran's power plants and bridges if the strategic waterway was not reopened by 8 p.m. Eastern Time (00:00 GMT Wednesday) [1]. This precise deadline has heightened market attention on the escalating Iran conflict, with traders anticipating that further tensions could strengthen the US Dollar as a safe-haven asset and create headwinds for the EUR/USD pair [1].
On the economic front, data released by the Institute for Supply Management (ISM) on Monday indicated that the US Services PMI declined to 54.0 in March from 56.1 in February, falling short of expectations at 55.0 and signaling a loss of momentum in the sector [1]. Additionally, traders are awaiting the release of US Durable Goods Orders and ADP Employment reports later on Tuesday, which could further influence market sentiment [1].
From the European perspective, a hawkish tone from the European Central Bank (ECB) could lend support to the Euro. Markets are now pricing in 2–3 interest rate hikes for 2026, driven by surging energy-related inflation, marking a significant shift from previous expectations of holding rates steady [1]. This change in rate expectations reflects the ECB's primary mandate to maintain price stability, with higher rates typically benefiting the Euro [1].
Overall, the EUR/USD pair is caught between geopolitical risks and shifting monetary policy expectations, with traders monitoring both the Iran situation and upcoming US economic data for further direction [1].
CONCLUSION
The EUR/USD pair is trading flat below 1.1550 as geopolitical tensions and US economic data weigh on market sentiment. While escalating Iran tensions could boost the US Dollar, expectations of future ECB rate hikes may support the Euro. Investors are awaiting further developments and data releases for clearer market direction.