The Euro (EUR) added to Tuesday’s weakness and drifted to fresh lows vs. the US Dollar (USD) on Wednesday. In fact, EUR/USD managed to reclaim the 1.1500 hurdle earlier in the day but eventually succumbed to the late Powell-led bounce in the US Dollar Index (DXY), which flirted with the key 99.00 barrier.

The move lower in the pair also came in tandem with extra weakness in US yields across different time frames as well as the second daily pullback in German 10-year bund yields.

Geopolitics adds to trade uncertainty

Heightened tensions in the Middle East have offset any fresh momentum from US-China trade talks, while the July 9 deadline for the “Liberation Day” tariffs continued to weigh on sentiment.

Indeed, the conflict between Israel and Iran escalated in recent hours, with market participants now starting to speculate over the potential intervention of the US in the crisis.