• EUR/USD drifts lower, nearing 1.1600, on track for its second consecutive weekly decline.
• Uncertainty about the outcome of the US-Iran peace negotiations is weighing on risk appetite.
• German GDP and IFO Business Climate data show some resilience to the Middle East conflict.

The Euro (EUR) nudges lower against the US Dollar (USD) for the second consecutive day on Friday, on track to close the week in the red for the second consecutive time. Contradicting messages from the Middle East overshadow a string of fairly upbeat German macroeconomic data released earlier on the day.

Risk appetite remains subdued on Friday as Tehran mulls the latest peace proposal submitted by the US. Investors are sceptical, as the stances on Iran’s nuclear activities and control of the Strait of Hormuz remain far apart, but comments by US Secretary of State Marco Rubio, highlighting “some progress” in the talks with Tehran, are keeping hopes alive.

On the macroeconomic front, data from Germany were supportive for the Euro. The final Q1 Gross Domestic Product (GDP), released earlier on Friday, confirmed that the economy grew at a 0.3% pace, steady from the last three months of 2025, while the annualised GDP was revised up to 0.4% from the previously estimated 0.3% growth.

A few hours later, CESifo Group revealed that the German IFO Business Climate Index improved to 84.9 in May, from an upwardly revised  84.5 in April, against expectations of further deterioration, to 84.2. Likewise, the sentiment about the current economic situation and the expectations for the next six months have improved beyond expectations, soothing concerns about the impact of the Middle East conflict on the Eurozone’s leading economy.

In the US, the Michigan Consumer Sentiment Index and the swearing-in ceremony for the next Federal Reserve (Fed) Chair, Kevin Warsh will gather investor’s attention. Data releazsed earlier on the week was US Dollar supportive, as the US S&P Global Purchasing Managers index (PMI) showed that manufacturing activity rose at its fastest pace in four years, endorsing the hawkishvpivot observed in the Fed´s minutes released the day before