On Wednesday, the EUR/USD exchange rate shows a tendency to rise against a backdrop of renewed optimism regarding a potential peace agreement between the US and Iran, which puts pressure on the US dollar and supports the strengthening of the euro.

Market sentiment improved following a report from Axios indicating that Washington and Tehran are nearing a possible agreement to halt hostilities and create a platform for more detailed discussions on nuclear issues.

The report suggests that the proposed agreement may involve suspending Iran's uranium enrichment in exchange for the lifting of US sanctions and the unblocking of billions of dollars in Iranian assets frozen in foreign accounts. It is also expected that both sides will agree to end the blockade of the Strait of Hormuz.

As a result of this announcement, oil prices dropped sharply, which in turn led to a decline in US Treasury yields.

Falling crude oil prices helped ease concerns about inflation driven by rising energy prices and reduced pressure on the Federal Reserve to tighten monetary policy. Traders have also begun to reassess the likelihood of the Fed cutting rates by the end of the year, changing their previous predictions that the central bank might be forced to maintain high rates for an extended period.

However, the EUR/USD pair has been constrained by instability surrounding the negotiations. US President Donald Trump warned that hostilities could resume if Iran does not accept the terms of the agreement; at the same time, the Iranian news agency ISNA reported that some Axios materials are speculative, characterizing US proposals as "ambitious and unrealistic."

This ongoing uncertainty has allowed the US dollar to stabilize after its prior decline. The US Dollar Index (DXY), which reflects the value of the US dollar relative to a basket of six major currencies, has been hovering around the 98.00 level.

Regarding macroeconomic indicators, the ADP report showed that private-sector jobs increased by 109,000 in April, surpassing March's figure (61,000) and market expectations (99,000), further supporting the American currency.

Meanwhile, traders have taken note of comments from St. Louis Fed President Alberto Musalem, who said inflation remains well above the target and emphasized the need to focus on core inflation, regardless of shocks from trade tariffs and oil prices. Musalem also indicated that inflationary risks are intensifying and that real scenarios may require keeping interest rates at their current level for a period of time.

In the near future, traders should focus on developments in negotiations between the US and Iran, as well as on the upcoming US labor market data to be released on Friday, specifically the Nonfarm Payrolls (NFP) report.

From a technical perspective, the pair has been unable to breach the round level of 1.3800 on Wednesday. However, prices are above the key moving averages, and the oscillators are positive, confirming a bullish advantage in the market. It should also be noted that the 100-day and 200-day moving averages are moving horizontally, indicating a sideways trend. If prices fail to hold above the 200-day SMA, the next support will be the 50-day SMA. However, if it breaks through the round level of 1.1800, the pair will challenge the April high around 1.1850.