Euro steadies as traders weigh conflicting US-Iran headlines, stronger Eurozone inflation data

EUR/USD holds firm on Tuesday as traders react to conflicting headlines surrounding US-Iran negotiations. At the time of writing, the pair trades around 1.1639 after touching a daily high near 1.1655.

Iran's semi-official Fars News Agency, citing an informed source, reported that the exchange of messages between Iran and the United States has been suspended for at least a few days over the proposed memorandum of understanding (MoU).

The report contrasts with comments from US President Donald Trump, who said on Monday that negotiations with Iran are continuing “at a rapid pace.” Trump also told ABC News that he expects Washington and Tehran to reach an agreement within the next week to extend the ceasefire and reopen the Strait of Hormuz.

Meanwhile, US Secretary of State Marco Rubio said an Iran deal “could happen today, tomorrow or next week.” Rubio also said the first condition in negotiations is for Iran to reopen the Strait of Hormuz, while Tehran must also agree on the disposition of its highly enriched uranium.

The US Dollar (USD) remains supported as major sticking points in negotiations remain unresolved, reducing hopes for a near-term deal.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is consolidating minor losses above the 99.00 mark.

The Euro (EUR) also finds support from the preliminary Eurozone inflation data. The Harmonized Index of Consumer Prices (HICP) rose 3.2% YoY in May from 3.0% in April, matching forecasts. The core HICP accelerated to 2.5% from 2.2%.

The latest inflation data increased the likelihood of a rate hike at the upcoming European Central Bank (ECB) monetary policy meeting later this month. ECB policymaker Olli Rehn said on Tuesday that the ECB is preparing an “insurance hike” in June.

Meanwhile, US JOLTS Job Openings rose to 7.618 million in April from 6.887 million in March, beating market expectations of 6.88 million. Traders now turn their attention to the ADP Employment Change due on Wednesday and the Nonfarm Payrolls (NFP) report on Friday.

Ongoing Oil-driven inflation risks have strengthened expectations that the Federal Reserve (Fed) may keep interest rates unchanged this year. The upcoming US labor market data could play a key role in shaping those expectations.