Euro Softens Below 1.1800 on US-Iran Ceasefire Risks, Traders Await US CPI Data

FXStreetMay 12, 2026 12:35 AM

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EUR/USD weakens to around 1.1775 in Tuesday’s early Asian session.
Trump said the US-Iran ceasefire was on ‘massive life support.’
Hawkish expectations for the ECB might help limit the Euro’s losses.

The EUR/USD pair loses ground to near 1.1775 during the early Asian session on Tuesday. The Euro (EUR) softens against the US Dollar (USD) as traders turn cautious ahead of the US April inflation report and ongoing geopolitical tensions in the Middle East.

Reuters reported on Monday that Iranian Parliament speaker Mohammad Bagher Ghalibaf warned that Iran’s military was fully prepared to retaliate against any future attacks after rising tensions threatened the fragile ceasefire in the Middle East.

Earlier Monday, US President Donald Trump said the ceasefire between the US and Iran is on “massive life support” after he rejected Tehran’s latest peace offer, which he called “simply unacceptable.” Signs of a prolonged conflict between the US and Iran could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair in the near term.

On the other hand, a hawkish stance from the European Central Bank (ECB) could provide some support to the shared currency. ECB Governing Council member Martin Kocher said on Monday that there’s no need to delay the interest rate hikes if energy prices don’t improve swiftly.

Financial markets are now pricing in a 92% chance of a 25 basis point (bps) hike at the June meeting, with a total of three hikes anticipated by the end of 2026, according to Reuters.

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