The euro fell in the European market on Tuesday against a basket of global currencies, resuming its losses that had paused yesterday against the US dollar, as investors are currently focused on buying the US currency as the best alternative investment, while awaiting developments in the Iranian war, especially with the approaching end of Donald Trump’s deadline to reopen the Strait of Hormuz later today.
With global oil prices continuing to rise and inflation in the Eurozone exceeding the European Central Bank's medium-term target, the likelihood of European interest rates being raised at least once this year has increased, pending the release of more crucial economic data in Europe.
Price overview
Euro exchange rate today: The euro fell against the dollar by about 0.15% to ($1.1524), from today’s opening price of ($1.1540), and recorded a high of ($1.1548).
The euro ended Monday's trading session up 0.25% against the dollar, its first gain in three days, amid renewed hopes for a ceasefire agreement in the Middle East brokered by Pakistan.
The US dollar index rose 0.15% on Tuesday, nearing its highest level in several months, reflecting the rise of the US currency against a basket of global currencies.
Demand for the US dollar is increasing as it is considered the best investment haven, as traders await the deadline set by Washington to reopen the Strait of Hormuz to navigation, amid growing fears that Iranian infrastructure could be attacked if there is no response.
Developments in the Iranian war
Trump is threatening to target civilian infrastructure if Iran does not meet the deadline later on Tuesday.
The Wall Street Journal: In private conversations with officials, Trump has become less optimistic about reaching an agreement with Iran.
Wall Street Journal: The gap between Washington and Tehran's positions cannot be narrowed before Trump's deadline expires.
Axios: Trump may postpone an attack on Iran if he sees real signs of an impending agreement.
Axios: Trump alone has the authority to decide to begin destroying Iranian infrastructure at 8 p.m. on Tuesday.
global oil prices
Global oil prices rose by an average of 2.5% on Tuesday, extending their gains for a third consecutive day, with Brent crude hitting a four-week high of $116.50 a barrel, due to concerns about the continued closure of the Strait of Hormuz and the failure of peace negotiations between the United States and Iran.
European interest rate
European Central Bank President Lagarde said the bank is prepared to raise interest rates even if the expected rise in inflation is short-term.
Data last week showed that inflation in the eurozone exceeded the European Central Bank's target of 2.5% in March, driven by rising energy prices.
Following that data, the money market's pricing of the likelihood of the European Central Bank raising European interest rates by about 25 basis points this April rose from 30% to 35%.
Sources told Reuters that the European Central Bank is likely to begin discussing raising interest rates during its meeting this month.
In order to reprice the above probabilities, investors are awaiting further economic data from the Eurozone on inflation, unemployment and wage levels.
