The euro rose in the European market on Monday against a basket of global currencies, as it attempted to recover after four consecutive days of losses against the US dollar, benefiting from the slowdown in the levels of the US currency, amid investors' assessment of developments in the Iranian war and the possibility of holding a round of negotiations between the United States and Iran in Pakistan.
Following more aggressive comments from the European Central Bank president last week, the odds of European interest rates being raised at least once this year have increased. In order to reassess those odds, markets are awaiting the release of key inflation data from Germany, the Eurozone's largest economy, later today.
Price overview
Euro exchange rate today: The euro rose against the dollar by about 0.2% to ($1.1521), from today’s opening price of ($1.1500), and recorded a low of ($1.1487).
The euro ended Friday's trading down 0.15% against the dollar, its fourth consecutive daily loss, amid escalating military confrontations in the Middle East.
The euro lost 0.55% against the dollar last week, its third weekly loss in the last month, due to concerns about the repercussions of the Iranian war and its negative impact on the European economy.
US dollar
The dollar index fell 0.2% on Monday, giving up a two-week high of 100.34 points, reflecting the slowdown in the US currency against a basket of major and minor currencies.
Apart from profit-taking, the US dollar is declining amid investors' assessment of developments in the Iranian war and the strong likelihood of a round of negotiations between the United States and Iran in Pakistan to halt the raging war in the Middle East.
Later today, Federal Reserve Chairman Jerome Powell is scheduled to speak, and his comments are expected to provide new clues about the path of US interest rates this year, especially after the recent surge in oil prices amid the fallout from the Iran war.
European interest rate
European Central Bank President Lagarde said last week that the bank is prepared to raise interest rates even if the expected rise in inflation is short-term.
Following those comments, the money market's pricing in the likelihood of the European Central Bank raising European interest rates by about 25 basis points next April rose from 25% to 35%.
Sources told Reuters that the European Central Bank is likely to begin discussing raising interest rates next month.
In order to reprice the above probabilities, investors are awaiting the release of key German inflation data for March later today.
Euro performance forecast
Here at FX News Today, we predict that if German inflation data comes in more aggressive than expected by the markets, the likelihood of European interest rate hikes this year will increase, leading to a further recovery in the euro's exchange rate against a basket of global currencies.
