EUR/USD remains subdued around 1.1550 amid rising tensions in the Middle East

EUR/USD extended its decline for a second session during Monday's Asian session, trading around 1.1540. The pair depreciated as the US dollar (USD) strengthened amid rising safe-haven demand amid escalating geopolitical tensions in the Middle East.

Israel began its attack on Iranian nuclear facilities and missile factories on Friday. Iran retaliated against Israel late Sunday night with explosions in the coastal city of Haifa. Israel continued to attack Iranian military targets despite international calls for diplomacy and de-escalation, CNN reported.

In addition, Iranian media Mehr News reported that Iran began the fourth phase of its operations against Israel on Sunday. Iranian officials stressed that they will "respond firmly to any Israeli risk-taking."

On Friday, data from the University of Michigan (UoM) showed that its consumer confidence index rose from 52.2 to 60.5 in June, beating market expectations of 53.5. The Federal Reserve (Fed) is expected to keep its policy rate unchanged in the range of 4.25%-4.50% in its decision on Wednesday. However, traders now expect a 25 basis point rate cut by September.

However, the downside for EUR/USD is likely to be limited as the euro (EUR) is supported by market sentiment that is optimistic that the European Central Bank (ECB) will pause its easing cycle to assess the impact of new US tariffs.