Commerzbank’s Antje Praefcke argues that geopolitical developments around the Iran conflict remain the primary driver for EUR/USD, outweighing upcoming US data such as ADP and Nonfarm Payrolls (NFP) . Praefcke notes that recent US employment figures have been volatile and unlikely to shift the Dollar meaningfully. EUR/USD is seen staying in its recent range unless the Middle East situation clearly escalates or de-escalates.

Iran conflict seen capping EUR/USD moves

"It’s worth taking another look at the macroeconomic data in the coming days. After all, the new US employment figures are on the agenda. Yesterday kicked things off with the JOLTS Job Openings (which were somewhat softish), followed today by the ADP Index and then the official jobs report on Friday. In this regard, a strong ADP Index could give the USD another slight boost, while a disappointing NFP report on Friday could weigh on it again."

"Since employment figures have been volatile in recent months and have not sent clear signals, they are likely to remain under close scrutiny. However, I doubt we will be any wiser than before, as job growth in April was likely relatively modest, meaning that once again, no clear direction in employment is likely to emerge. In this respect, the data (barring any surprising outliers) is likely to have little impact on the US dollar."

"In my view, the situation remains the same: as long as there is no sign that the war in the Middle East might come to an end, all other issues are secondary for the time being anyway. In this regard, I do not expect the upcoming US data to provide any significant momentum for the USD over the course of the week. Only a clear direction in the Iran conflict - de-escalation or renewed escalation - is likely to cause EUR/USD to break out of the range we have been seeing for several weeks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)