Euro expands gains to seven-week high on positive outlook

The euro rose in European markets on Thursday against a basket of global currencies, extending its gains for the ninth consecutive day against the U.S. dollar and recording its highest level in seven weeks, amid a positive atmosphere dominating global markets due to optimism regarding the possibility of the United States and Iran reaching a peace agreement.

The American currency continues its losses as the White House's optimism regarding a peace deal with Iran has bolstered sentiment and encouraged investors to abandon their safe-haven positions while awaiting new developments concerning the intensive talks between Washington and Tehran.

Following the recent decline in global oil prices, indications are increasing that inflationary pressures on monetary policy makers at the European Central Bank (ECB) are receding, and the probability of raising European interest rates this year has declined.

Price Overview

- Euro Exchange Rate Today: The euro rose against the dollar by 0.2% to ($1.1824), the highest since February 27, from today's opening price of ($1.1799), and recorded a low of ($1.1795).

- The euro ended Wednesday's trading up by less than 0.1% against the dollar, marking its eighth consecutive daily gain—the longest streak of daily gains this year—amid positive developments regarding the U.S.-Iranian talks.

The U.S. Dollar

The dollar index fell on Thursday by more than 0.2%, deepening its losses for the ninth consecutive session and recording a six-week low of 97.83 points, reflecting the continued drop in the levels of the American currency against a basket of major and minor currencies.

Optimism has increased in the markets regarding the probability of the United States and Iran reaching a peace agreement, prompting investors to reduce their holdings of the American currency as a safe haven and move toward higher-risk assets.

U.S. President Donald Trump stated that the U.S.-Israeli war on Iran is "about to end," while the White House expressed optimism about the possibility of reaching a deal, noting the likelihood of additional rounds of direct talks in Pakistan.

Khoon Goh, head of Asia research at ANZ Bank, said: Markets are now essentially ignoring the conflict and expecting some kind of settlement. Goh added: With markets pricing out the impact of the war, we may see more pressure on the dollar and a resumption of the downward trend that began roughly last year.

European Interest Rates

- With the decline in global oil prices, the money market pricing of the probability of the European Central Bank raising European interest rates by about 25 basis points in April fell from 35% to 15%.

- In order to re-price the above probabilities, investors await the release of more economic data in the eurozone regarding the levels of inflation, unemployment, and wages.