EUR/USD Holds Near 1.1590 as Hormuz Deal Lifts Risk Mood

EUR/USD Holds Near 1.1590 as Hormuz Deal Lifts Risk Mood — Fed Decision Looms

EUR/USD is trading around 1.1590 in Tuesday's Asian session, supported by a wave of risk-on sentiment following the signing of a US-Iran memorandum of understanding to reopen the Strait of Hormuz. The Euro is benefiting from USD softness — but the rally has a ceiling, with the Federal Reserve's rate decision just 24 hours away.

The Deal: What Was Signed and What's Still Disputed

US President Donald Trump and Vice President JD Vance virtually signed the agreement to end the US blockade of Iranian ports and begin 60 days of nuclear negotiations. Iranian Parliament Speaker Mohammad Bagher Ghalibaf signed on behalf of Tehran.

The headline is positive for risk appetite — and by extension, EUR/USD. But the details introduce meaningful uncertainty:

① Toll dispute unresolved

Iran intends to collect transit fees in the Strait of Hormuz. Trump insists it will reopen fully and toll-free by Friday. Two contradictory positions, one waterway.

② Military threat still on the table

Trump stated on Monday that if Iran fails to reach a final nuclear accord, he will restart military attacks on Tehran. The 60-day clock is now ticking — and markets know it.

③ Shipping lines not yet moving

Major carriers are holding off on rerouting vessels until the official text is published and terms are clarified, per Bloomberg. Risk sentiment is cautiously optimistic, not conclusively bullish.

Fed Is the Bigger Variable for EUR/USD

The pair's near-term direction will likely be decided Wednesday, not Tuesday. The Fed is universally expected to hold rates at 3.50%–3.75%, but new Chair Kevin Warsh's press conference tone is what traders are really positioned around.

Hawkish Warsh → USD rebounds → EUR/USD retreats from 1.1590

Neutral/dovish tone → USD stays soft → EUR/USD tests resistance above 1.1600

Any signal that Warsh intends to maintain a tightening bias — even without an immediate hike — would likely cap the Euro's current upside momentum.

Key Levels to Watch

• 1.1600 — Psychological resistance; intraday ceiling being tested
• 1.1590 — Current price; near-term pivot
• 1.1550 — Near support; break would signal fading risk appetite
• Wednesday 14:00 ET — Fed decision; primary directional catalyst for the pair

Southeast Asia Trader Outlook

For traders in Singapore, Malaysia, and Indonesia, EUR/USD offers a clean read on the USD sentiment heading into Wednesday's Fed event. The pair is effectively pricing two outcomes simultaneously: cautious optimism on Hormuz, and pre-Fed positioning anxiety. Volatility around Wednesday's announcement is likely to be elevated.

Trade EUR/USD CFDs on VG Markets with live spreads ahead of the Fed decision.

Risk Warning: CFD trading involves significant risk and may result in the loss of all invested capital. Products offered by VG Markets may not be suitable for all investors.

Sources: FXStreet, Bloomberg, CME FedWatch Tool.