The euro rose in the European market on Tuesday against a basket of global currencies, attempting to recover from a two-week low against the US dollar, on its way to achieving its first gain in the last three days, benefiting from the halt in the rise of the US currency levels ahead of the release of key US inflation data for June.
Amid the broad rise in global oil prices, inflationary pressures are renewed on monetary policymakers at the European Central Bank, which strongly reinforces the likelihood of a European interest rate hike next September.
Price overview
Euro exchange rate today: The euro rose against the dollar by about 0.15% to ($1.1397), from today’s opening price of ($1.1382), and recorded a low of ($1.1378).
The euro ended Monday's trading down 0.3% against the dollar, its second consecutive daily loss, hitting a two-week low of $1.1377, due to renewed military tensions between the United States and Iran.
US dollar
The dollar index fell more than 0.1% on Tuesday, giving up a two-week high of 101.33 points, reflecting a halt in the rise of the US currency against a basket of global currencies.
Apart from profit-taking, the dollar is declining as investors refrain from building new long positions ahead of key US inflation data for June, which will provide crucial clues about the likelihood of the Federal Reserve raising US interest rates this year.
Federal Reserve Governor Christopher Waller said on Monday that the U.S. central bank may need to raise interest rates in the near term if upcoming data shows inflation continuing well above the target of 2%.
global oil prices
Oil prices rose more than 2% on Tuesday, extending gains for a second consecutive session and hitting a one-month high, as military tensions between the United States and Iran continued to escalate around the Strait of Hormuz.
Undoubtedly, rising global oil prices are renewing fears of accelerating inflation, which could prompt global central banks to raise interest rates in the near term, in a sharp departure from pre-war expectations of lowering or holding interest rates steady for a long period.
Developments in the Iranian war
US forces carried out an intensive bombing campaign that lasted for five continuous hours, targeting military targets belonging to the Revolutionary Guard in some Iranian cities.
US President Donald Trump proposes imposing a 20% tariff on goods passing through the Strait of Hormuz and reimposing sanctions on Iran.
CENTCOM has officially announced that it will resume enforcing the naval blockade on ships traveling to and from Iranian ports at 4:00 PM Eastern Time on Tuesday.
The Iranian Revolutionary Guard announced the launch of more missiles and drones at US bases in some Gulf countries, while also targeting some oil tankers that attempted to cross the Strait of Hormuz.
European interest rate
Amid rising global oil prices, the money market's pricing in the likelihood of the European Central Bank raising European interest rates by about 25 basis points this July has risen to over 35%.
The pricing of the probability that the European Central Bank will raise European interest rates by about 25 basis points in September has risen to above 95%.
In order to reprice those possibilities, investors are awaiting the release of more economic data in the Eurozone on inflation, unemployment and wage levels.
