The euro/dollar pair cannot decide on a direction. On Monday, buyers pushed EUR/USD up to the edge of the 1.17 area, marking 1.1699. In that price zone, the upward impulse faded, after which sellers seized control and drove the pair down to 1.1635, the low of the day. Sellers, however, failed to build on their gains. The pair drifted into consolidation in the mid?1.16s, reflecting indecision among both bears and bulls.

The fundamental picture for EUR/USD is not only contradictory — it is heterogeneous in structure. Multiple news narratives are piling up, generating concurrent signals that run parallel rather than reinforce one another.

For example, on Monday, the pair rose after reports that Federal Reserve Chair Jerome Powell had become the subject of a criminal investigation. The US Attorney's Office for the District of Columbia has opened a probe into Powell over his testimony to Congress last June concerning a Fed building renovation project and alleged false statements about the cost and intended use of funds. Several Fed officials, including Powell, have received grand jury subpoenas. Members of the grand jury will assess evidence and hear witnesses before deciding whether there is sufficient basis to bring charges.

In response to that news, EUR/USD hit the weekly high of 1.1699. Traders quickly faded that story because it stretches out over time. A grand jury can review evidence for weeks or months before reaching a final decision on whether to indict. Market participants, therefore, lost interest in the "Powell case" almost immediately. On the same day, sellers regained the initiative ahead of US inflation data.

The inflation release proved inconclusive as it was neither clearly bearish nor bullish for EUR/USD. On a headline basis, the CPI came in line with forecasts, remaining at 2.7% year?on?year in December, the same reading as in November. Core consumer prices were in the red zone relative to expectations, but in effect, they also remained flat month?on?month at 2.6% year?on?year. Most analysts had predicted a rise to 2.7% year?on?year.

The good news for EUR/USD bulls is that the CPI is not accelerating — neither headline nor core. The good news for sellers is that inflation is not decelerating. Stagnation in a key inflation indicator disappointed both bulls and bears, so traders almost immediately shifted their attention away from geopolitics.

That shift was not straightforward either. Yesterday, President Donald Trump posted a combative message saying US assistance to Iranian protesters was "already underway." He also said the White House, and he personally, had halted all negotiations with Tehran.

Markets grew uneasy, and the safe?haven dollar saw increased demand, helping EUR/USD to print an intraday low of 1.1635. Reports also flagged an important speech by Mr. Trump in which he might announce the start of military action against Iran.

He did not do so. In the televised address, the president offered nothing new and largely recycled previous talking points. Moreover, NBC News reported that Israel and Arab states have urged the United States to "hold off" on strikes against Iran. Israeli officials reportedly asked the White House to cancel or postpone large?scale strikes at least until Iranian authorities are in an even more pressured position because of the protests.

It is important to note that political and, especially, geopolitical fundamentals have a short shelf life and require constant news flow to sustain their market impact. Mr. Trump drew attention yesterday and unsettled markets, but he did not meet market expectations.

As a result, EUR/USD returned to its prior levels and settled into a narrow trading range. Overall, if Mr. Trump's threats — not only regarding Iran, but also Colombia, Cuba, and Greenland — are not backed by action in the near term, risk?off sentiment will begin to ease and the dollar will come under renewed pressure.

Given the prevailing uncertainty, EUR/USD is likely to continue trading sideways, reflecting indecision among both sellers and buyers. Under these conditions, it is prudent to stay out of the market, because traders have not resolved the direction of price movement — price swings look chaotic and, to a large degree, unpredictable.