The EUR/USD pair rebounded from the 1.0900 mark during the European session on Tuesday, buoyed by renewed optimism surrounding the German vote on the spending plan. This positive sentiment helped offset concerns over escalating tensions in the Middle East and ongoing trade disputes. Meanwhile, the GBP/USD pair also showed resilience, bouncing back towards the 1.3000 level during the same trading hours, as fresh weakness in the US Dollar provided a lift to both currency pairs.
The renewed selling of the US Dollar has been a significant factor in supporting the EUR/USD pair. Investors are looking beyond the current geopolitical tensions in the Middle East, focusing instead on upcoming US-Russia talks regarding a potential peace deal for Ukraine. This anticipation has contributed to the subdued demand for the US Dollar. Additionally, optimism around Germany's spending plan vote has created a favorable environment for the euro, providing further support to the EUR/USD pair.
The GBP/USD pair has also benefited from the recent downturn in the US Dollar. The weakness of the dollar, driven by mounting Middle East and trade tensions, has allowed the pound to regain ground in European trading hours. Market participants appear to be prioritizing developments in Europe and diplomatic efforts over immediate geopolitical risks.
The German vote on the spending plan is viewed as a key positive factor for the EUR/USD pair, as it underscores Europe's commitment to economic stability amid global uncertainties. Despite escalating tensions in other regions, investors remain focused on potential resolutions and economic measures that could influence currency markets.