Daily Market Update
July 08, 2026EUR/USD ranged from the low 1.14’s overnight. EUR/USD comes under bearish pressure on Wednesday and declines toward 1.1400. US President Trump said the MoU signed with Iran to end the conflict was “over” and added that the didn’t want to engage with Tehran anymore, triggering a flight-to-safety and boosting the USD.
The EUR/USD holds minor gains as the US Dollar (USD) inches lower after experiencing volatility. The Greenback may regain its ground amid rising safe-haven demand and renewing geopolitical tensions. US airstrikes against Iran came in response to Iranian attacks on commercial vessels in the crucial Strait of Hormuz, including a Qatari LNG carrier and a Saudi oil tanker.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that the era of bullying and extortion has ended and insisted that Iran will not fold under pressure. Meanwhile, the country’s top joint military command denounced the attacks on southern Iran as blatant aggression, promising a crushing military response.
Defiant over the strategic waterway, Tehran reaffirmed that it will block any US interference regarding the control and management of the Strait of Hormuz.
European Central Bank (ECB) rate hike bets rose after board member Isabel Schnabel warned that the Iran conflict keeps core inflation elevated.
ECB policymaker and Governor of the Bank of Italy Fabio Panetta warned Eurozone inflation risks remain high due to energy supply uncertainties in the Strait of Hormuz.
Panetta flags fragile outlook and inflation risks, supporting Euro underperformance
ECB’s Panetta scores 6.2/10 on FXS Speechtracker, notably above the historic 4.2/10 baseline, signaling a more impactful intervention than usual. The focus on Strait of Hormuz uncertainty and increasingly frequent supply shocks underscores persistent upside inflation risks, tilting the tone modestly hawkish despite clear concern about downside growth.
By stressing that upside inflation and downside growth risks remain and that the outlook is fragile, the speech reinforces a narrative of constrained policy flexibility.
For FX, this mix of inflation vigilance and growth anxiety suggests limited support for the Euro, with markets likely to price in lingering risk premia rather than a confident policy tightening path.
GBP/USD struggles to find its footing and trades in negative territory below 1.3350, pressured by the renewed USD strength.
US President Donald Trump said on the MoU signed with Iran to end the conflict was “over”, causing safe-haven flows to dominate the action in financial markets. Later in the American session, the Fed will publish the minutes of the June policy meeting.
Investors will closely read the FOMC Minutes to gauge possible reasons that led officials to abandon forward guidance on the monetary policy outlook. In the policy meeting, the Fed decided to leave interest rates unchanged in the range of 3.50%-3.75%, citing upside inflation risks, and 9 out of 19 policymakers favored an interest rate hike by the year-end.
Meanwhile, the British Pound (GBP) struggles for direction as investors seek fresh cues regarding the United Kingdom’s (UK) fiscal policy outlook under new leadership.
However, newly elected Member of Parliament and Mayor of Greater Manchester, Andy Burnham, the front-runner for UK leadership after Prime Minister (PM) Keir Starmer’s resignation, has already stated that he will continue Labour’s manifesto.
USD/JPY gains traction and advances toward 162.50 on Wednesday. The US Dollar (USD) gathers strength and allows the pair to push higher as tensions in the Middle East reescalate after US President Trump said that the MoU signed with Iran is “over.”
A new round of US strikes on Iran, in retaliation for alleged attacks from Tehran on vessels closing Hormuz earlier this week, hurt risk appetite on Wednesday. and provided some support to the safe-haven US Dollar,
The Yen, however, is suffering from weakness of its own, as BoJ monetary committee member Toichiro Asada, the dovish dissenter at June’s monetary policy meeting, said that he needs to see signs of demand-driven inflation before supporting interest rate hikes.
Source FX Street
