|
Euro deepens losses to three-week trough before ECB's decisions
The Euro fell in the European market on Thursday against a basket of global currencies, deepening its losses for the third consecutive day against the U.S. dollar. The currency hit a three-week low as risk aversion persists among investors, who continue to favor the American dollar as the primary alternative investment due to reports that the U.S. is considering a sustained naval blockade on Iran.
The European Central Bank (ECB) concludes its third periodic monetary policy meeting of 2026 later today. Markets widely expect interest rates to remain on hold for the seventh consecutive meeting, while looking to the upcoming statement for further signals regarding the future path of interest rates this year.
Price Overview
• Euro Exchange Rate Today: The Euro fell against the dollar by approximately 0.2% to ($1.1655), the lowest since April 9, from an opening price of ($1.1676), after recording a session high of ($1.1689).
• The Euro ended Wednesday's trading down 0.3% against the dollar, marking its second daily loss following U.S. military threats of limited strikes on Iran and a hawkish Federal Reserve meeting.
The U.S. Dollar
The dollar index rose 0.15% on Thursday, extending gains for the third consecutive session to reach a three-week high. This reflects the ongoing ascent of the American currency against a basket of major and minor rivals.
This rise is driven by investors focusing on the U.S. dollar as a safe haven amid escalating fears that current peace talks between the U.S. and Iran have reached a deadlock, alongside the increasing likelihood of renewed military confrontations in the Middle East.
Efforts to end the war have hit an impasse, with Donald Trump expressing dissatisfaction with Tehran's latest proposal. The U.S. President insists on addressing the nuclear file as a core component of any peace agreement. Furthermore, President Trump discussed ways to limit the repercussions of the U.S. blockade on Iranian ports—which could extend for several months—with major oil companies to ensure supply stability and reduce pressure on global energy markets.
Global Oil Prices
Oil prices continue to climb in global markets, with Brent crude reaching its highest level in six weeks amid fears of prolonged supply disruptions as the Strait of Hormuz remains closed.
Media reports suggest that the U.S. military will brief Trump later today on potential measures against Iran, which may include "short and powerful" military strikes targeting Iranian infrastructure.
European Central Bank
The ECB concludes its third monetary policy meeting of 2026 later today. Expectations are currently stable for keeping European interest rates unchanged at 2.15%, the lowest level since October 2022, marking the seventh consecutive meeting without a change.
The interest rate decision and policy statement are due at 12:15 GMT, followed by a press conference with ECB President Christine Lagarde at 12:45 GMT.
Euro Performance Forecast
We at "Economies.com" expect that if the ECB’s comments come in less aggressive than market expectations, the probability of European interest rate hikes this year will decline. This would likely deepen the Euro's losses against a basket of global currencies.
Yen tries to recover from two-year trough under government supervision
The Japanese yen rose in the Asian market on Thursday against a basket of major and minor currencies, attempting to recover from a two-year low against the U.S. dollar. This rebound is driven by buying activity at lower levels, alongside increasing expectations of intervention by Japanese authorities after the local currency traded below the 160 yen threshold.
Despite today's gains, the Japanese currency is on track to suffer its third consecutive monthly loss, as investors prioritize the U.S. dollar as the preferred alternative investment amid escalating tensions between the United States and Iran.
Price Overview
* Japanese Yen Exchange Rate Today: The dollar fell against the yen by more than 0.2% to (160.07¥), from an opening price of (160.43¥), after recording a session high of (160.44¥).
* The yen ended Wednesday's trading down 0.5% against the dollar, marking its second consecutive daily loss. It hit a two-year low of 160.47 yen following U.S. military threats to launch limited strikes on Iran and a hawkish Federal Reserve meeting.
Japanese Authorities
Finance Minister Satsuki Katayama reiterated warnings that the Japanese government stands ready to take "decisive and strong measures" to counter excessive currency market movements. Authorities confirmed they are on high alert and "ready to respond 24 hours a day" during the current "Golden Week" holiday period to prevent any sudden collapses.
Analysts at IG noted in a memo: "Although the USD/JPY pair has entered intervention territory, Japanese authorities will be cautious about intervening too early given Japan's vulnerability as a major energy importer and the current deadlock in the Middle East."
Japanese Interest Rates
* Market pricing for a quarter-point interest rate hike by the Bank of Japan (BoJ) at the upcoming June meeting remains stable at around 75%.
* Investors are awaiting further data on inflation, unemployment, and wages in Japan to refine these expectations.
Monthly Performance
* Throughout April's trading, which officially concludes with today's price settlement, the yen is currently down approximately 1.0% against the U.S. dollar, poised for its third consecutive monthly loss.
* These monthly losses are attributed to investors favoring the U.S. dollar as a safe haven due to the repercussions of the Iranian war and the continued escalation of tensions between Washington and Tehran.
Brent exceeds $118 as Trump vows to maintain Iran blockade until nuclear deal
Oil prices surged by more than 6% on Wednesday after U.S. President Donald Trump stated he would maintain the American naval blockade on Iran until it agrees to a nuclear deal.
Global benchmark Brent crude futures jumped over 6% to reach 118.33 dollars per barrel by 12:10 p.m. ET, while U.S. West Texas Intermediate (WTI) futures also climbed more than 6% to 106.37 dollars per barrel.
Trump told Axios on Wednesday: "The blockade is somewhat more effective than bombing. They are choking like a stuffed pig, and it's going to get worse for them. They cannot have a nuclear weapon."
He added that "attempts to continue negotiations to end the war have stalled in recent days."
For its part, Iran has refused to reopen the Strait of Hormuz unless the United States lifts the blockade. Tehran's control over the Strait has effectively choked oil exports from the Middle East.
Energy market traders also continue to assess the implications of the United Arab Emirates' surprise decision to withdraw from OPEC, though analysts suggest the impact remains limited as long as the Middle East crisis persists.
Strategists at the Dutch bank ING noted in a research memo issued Wednesday that the UAE's exit from the group of oil-producing nations represents a "major blow" to OPEC. They suggested Trump might welcome the move as it "weakens OPEC's influence in the oil market and could be beneficial for importers and consumers."
They added: "The primary driver for oil prices in the near term remains tied to developments in the Gulf and the timing of the resumption of oil flows through the Strait of Hormuz."
