Both the EUR/USD currency pair and Gold (XAU/USD) experienced positive momentum in early trading on Monday, driven by improved risk sentiment following US President Donald Trump's decision to call off planned attacks on Iran and the announcement that US-Iran negotiations would resume later in the day [1][2]. This development has fueled optimism for a diplomatic resolution to the ongoing Middle East crisis, which has been a key factor influencing market direction [1][2].
EUR/USD traded near 1.1535 during the early European session, supported by these geopolitical headlines. However, the pair remains constrained below the 100-day Simple Moving Average (SMA) at 1.1569, indicating that the broader tone is still heavy despite the latest bounce. The Relative Strength Index (14) at 62.5 shows firm positive momentum, but price action suggests only a corrective rebound within a bearish backdrop. Immediate support is noted at 1.1529, with deeper cushions at 1.1430 and 1.1331 if selling resumes. A daily close above 1.1569 would be needed to ease bearish pressure and open the way for a more sustained recovery [1]. Analysts at Scotiabank highlighted that the Euro received a modest lift earlier from French CPI data, which came in well above expectations, but this support was short-lived as broader themes took precedence. ECB commentary remains limited, leaving the currency to trade on prevailing macro drivers [1].
Gold (XAU/USD) held above the $4,050 level but struggled to break above $4,100, as the US Dollar staged a modest recovery from its lowest level since June 17. The upside for the USD appears limited due to receding Federal Reserve rate hike expectations and renewed hopes for a US-Iran peace deal. The OPEC+ decision to increase production in September led to a steep decline in crude oil prices, easing inflation fears and tempering bets for aggressive Fed policy tightening, which supports Gold prices [2]. Technical analysis shows Gold remains confined in a familiar range below the 200-day SMA, with the MACD indicator in positive territory (near 11.6) hinting at tentative upside momentum, while the RSI (14) at 47.1 remains neutral, suggesting limited directional conviction. Any further move up may struggle to find acceptance above $4,100 [2].
Market participants are closely watching upcoming US macroeconomic data, including the ISM Manufacturing PMI due later Monday and the Nonfarm Payrolls (NFP) report on Friday, for further direction. Traders remain cautious, awaiting additional geopolitical developments and macroeconomic releases to guide their next moves [1][2].
CONCLUSION
Optimism surrounding US-Iran negotiations and easing inflation fears have provided a modest lift to both EUR/USD and Gold, though technical resistance and cautious sentiment limit further upside. Market participants are awaiting key US economic data and additional geopolitical headlines for clearer direction. The overall market impact is medium, with both assets showing tentative gains but remaining within established ranges.