Daily Market Update
April 10, 2026EUR/USD ranged from the high 1.16’s to low 1.17’s overnight. Tensions around the Strait of Hormuz offer some support to Crude Oil prices, fueling inflationary concerns and bolstering hawkish US Federal Reserve (Fed) expectations.
This, in turn, is seen acting as a tailwind for the safe-haven USD and undermining the EUR/USD pair. However, hopes of Iran ceasefire stabilizing hold back the USD bulls from placing aggressive bets ahead of the crucial US Consumer Price Index (CPI) and offer some support to the currency pair.
Market sentiment remains cautious. Israel continues its strikes on Hezbollah. However, Israeli Prime Minister Benjamin Netanyahu said Israel will begin direct talks with Lebanon soon.
Moreover, US President Donald Trump said US forces will remain deployed around Iran until full compliance with the agreement.
US Vice President JD Vance and senior envoys Steve Witkoff and Jared Kushner are set to meet in Pakistan this weekend over a potential long-term deal with Iran.
Meanwhile, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Thursday that holding talks to end the war is contingent on the US adhering to its ceasefire commitments.
He claimed that those commitments include a ceasefire in Lebanon, which the US and Israel insist was not part of the deal.
Bank of England (BoE) Governor Andrew Bailey warned that the Iran war could spark a 2008-style crisis, as stress in the opaque $3 trillion (£2.2 trillion) private credit market risks spilling into global markets already hit by energy shocks and debt turmoil, as reported by The Telegraph.
The USD/JPY pair builds on the previous day’s modest rebound from sub-158.00 levels, or a nearly three-week low, and gains some positive traction on Thursday.
Spot prices climb back above the 159.00 round figure during the first half of the European session and draw support from a combination of factors. The Japanese Yen (JPY) is undermined by economic concerns stemming from Middle East conflicts, which, along with a modest US Dollar (USD) uptick, acts as a tailwind for the currency pair.
Given that Japan depends mostly on oil imports from the Middle East, investors remain concerned that the economy will come under substantial strains in the foreseeable future due to continued disruptions to shipping through the Strait of Hormuz.
In fact, Iran once again shut down traffic through the strategic waterway and threatened to withdraw from the ceasefire in response to brutal Israeli attacks on Lebanon. Israeli forces have carried out a devastating bombardment across Lebanon, saying that the ceasefire was not extended to Lebanon due to the role of the armed group Hezbollah.
The White House also confirmed that Lebanon is not part of the two-week ceasefire drawn up between Iran and the US.
Furthermore, US President Donald Trump warned of renewed strikes if the Iran deal fails, suggesting that escalation risks remain on the table.
This, to a larger extent, overshadows the US Federal Reserve’s (Fed) balanced outlook and offers some support to the USD, which maintains its status as the global reserve currency.
Minutes from the March 17–18 FOMC meeting released on Wednesday revealed a higher-for-longer stance, with officials in no rush to cut interest rates amid upside risks to inflation stemming from Middle East energy price shocks.
That said, policymakers still signaled one rate reduction by the end of this year and another in 2027, though the timing remains unclear.
Source FX Street
