The euro/dollar pair began the trading week almost at Friday's close (close 1.1515, open 1.1522), which signals a wait-and-see stance by traders. Such caution is fully justified, given the events ahead. After all, tomorrow—7 April—the deadline of Trump's ultimatum to Iran expires.

Yesterday, the US president made arguably his most aggressive statement since the start of the Persian Gulf conflict. Using profane language, the White House chief set a new date for the start of a large-scale air operation— "Tuesday, 08:00 p.m. ET," i.e., 7 April at 20:00 Eastern Time. He also explicitly threatened Iran with the destruction of civilian infrastructure if the Strait of Hormuz is not reopened by the specified deadline.

It is worth noting that the previous deadline expired on Monday—in other words, Donald Trump has postponed his ultimatum for the third time. At the same time as issuing threats, he continues to insist that the negotiation process is ongoing: in an interview with Fox News, he said Iran continues to negotiate and that there is a good chance of reaching an agreement in the coming days.

This is precisely why EUR/USD traders are cautious at the start of the new trading week. Despite Trump's aggressive rhetoric, the dollar is not in significant demand as a safe haven currency, especially against the backdrop of conflicting leaks from influential global media.

In particular, Axios reports that the US, Iran, and several regional mediators (Pakistan, Turkey, and Egypt) are discussing terms for a 45-day ceasefire "that could lead to an ultimate end to the war." Mediators have proposed a two-stage ceasefire: in the first stage "the guns fall silent," and in the second stage the parties try to resolve key settlement issues (reopening the Strait of Hormuz, Iran's missile program, the fate of highly enriched uranium, etc.). Axios sources acknowledge, however, that the chances of reaching a partial agreement within 48 hours (i.e. before Trump's ultimatum expires) are small.

Nevertheless, even with slim chances of a truce, traders are reluctant to open large dollar-long positions. Stakes are high: as participants in the talks admit, this is the last chance to prevent "dramatic escalation of the war," which would include massive strikes on Iran's energy infrastructure and Tehran's retaliatory actions (strikes on desalination plants and other infrastructure in Persian Gulf countries).

At present, the situation remains suspended. The balance can swing either way. According to official Iranian representatives, Tehran has indeed received a US ceasefire proposal via Pakistan. Reuters reports that the Iranians have not rejected the outstretched hand—at the moment the US offer "is under consideration." Iranian representatives, however, stress that they will not make any decisions under pressure or within imposed deadlines.

In other words, uncertainty persists. Donald Trump has already postponed his ultimatum deadline three times—and, as we see, the market has interpreted this behavior as confirmation of back-channel negotiations. At the same time, one cannot rule out that the president's tactic may be an attempt to buy time to prepare for massive air strikes and possibly a ground operation (notably, the seizure of Iran's Kharg island).

Under such uncertainty, any trading decisions on EUR/USD look risky, especially today, when many European countries and the US observe Easter Monday (key trading venues are closed).

Broadly speaking, currency market participants (including EUR/USD traders) are at a crossroads: if back-channel talks fail, the dollar will again be in strong demand as a safe-haven asset. If the parties agree to a temporary truce, risk appetite will rise, and macroeconomic releases will move back into focus.

A reminder: this week, final US Q4 GDP figures and key inflation indicators—the core PCE index and the CPI—will be published. Also, this week we will see the minutes of the March Fed meeting (released on Wednesday) and the ISM services PMI. All these releases will set the tone for trading — but only if the guns in the Middle East go quiet. For now, the suspense remains, so under current conditions it is wiser to pause and stay out of the market.