EUR/USD rose on Monday as the US Dollar fell to a six-week low, with the US Dollar Index (DXY) at 98.36, down 0.29%. The pair traded at 1.1757–1.1758, up 0.32%.
Improved risk mood supported the euro, with the pair near the 1.1800 level. The two-week ceasefire was described as fragile, with the US and Iran possibly returning to talks after a meeting last Saturday.
Strait Of Hormuz Tensions
Talks in Pakistan lasted 21 hours. Iran was unwilling to give up its nuclear programme and control of the Strait of Hormuz, and the White House then imposed a blockade in the Strait of Hormuz.
Donald Trump said Tehran wants a deal. The New York Post reported Iran was studying a halt to uranium enrichment, a US condition for ending the war, and EUR/USD rose after the report.
US Existing Home Sales fell to a nine-month low of 3.98 million in March, down 3.6% month-on-month. In Hungary, Peter Magyar won by a landslide over Viktor Orban, who had been in power for 16 years.
ECB Vice President Luis de Guindos said the conflict impact depends on its duration, and ECB’s Vujcic said energy prices are within the baseline. Markets were watching March PPI, the ADP Employment Change 4-week average, Fed speakers, and ECB remarks from Philip Lane (twice) and Mario Cipollone.
How The Macro Picture Changed
We remember looking at the market in 2025 when a fragile truce in the Middle East and a weak US housing report pushed the EUR/USD toward 1.1800. Today, on April 14, 2026, the landscape is entirely different, with the pair struggling to hold ground around 1.0750. The dynamics that drove the dollar down last year have clearly reversed course.
The US Dollar Index (DXY), which had fallen to the 98 level, is now trading firmly above 105.5. This reversal is largely due to divergent central bank policies, with recent US inflation data for March 2026 coming in at a stubborn 3.4%, forcing the Fed to maintain a hawkish stance. Meanwhile, with Eurozone inflation having cooled to 2.2%, the European Central Bank is now openly discussing a rate cut for this summer.
The geopolitical focus has also shifted significantly since the tensions in the Strait of Hormuz dominated last year’s news. While the pro-EU political changes in Hungary offered the Euro temporary support in 2025, broader economic fundamentals are now the main driver. The market appears less sensitive to Middle East headlines and more focused on interest rate differentials between the US and Europe.
Given this context, traders should consider strategies that benefit from a stronger dollar and weaker euro. Buying put options on the EUR/USD with expiration dates in June or July can offer a way to profit from a potential ECB rate cut. This approach provides downside exposure while clearly defining the maximum risk involved in the trade.
For those anticipating increased market movement around the next central bank meetings, a long straddle could be effective. This strategy involves buying both a call and a put option, profiting if the EUR/USD makes a significant move in either direction. With US employment data and Eurozone inflation figures due in the next few weeks, implied volatility is likely to rise, creating opportunities for this kind of play.
