Euro moves in a positive zone before US jobs data

The euro advanced in European trading on Friday against a basket of global currencies, extending gains for a second consecutive session against the US dollar as risk sentiment improved and investors maintained hopes that the United States and Iran could reach a peace agreement to end the conflict in the Middle East.

Global financial markets are now awaiting the release of the US May nonfarm payrolls report later today, which is expected to provide further clues about the Federal Reserve’s interest rate path this year.

Price Overview

• EUR/USD today: The euro rose by around 0.2% against the dollar to $1.1628, up from an opening level of $1.1610, after touching an intraday low of $1.1608.

• The euro closed Thursday up 0.1% against the dollar, recording its first gain in four sessions following the announcement of a ceasefire between Hezbollah and Israel through US mediation.

US Dollar

The US Dollar Index fell about 0.1% on Friday, extending losses for a second straight session and moving further away from its two-month high, reflecting continued weakness in the US currency against a basket of major global peers.

The dollar remains under pressure as risk appetite improves moderately, supported by investor optimism that the United States and Iran are nearing a peace agreement that could bring an end to the three-month conflict.

Later today, markets will focus on the US May employment report, which is expected to provide stronger evidence regarding the Federal Reserve’s interest rate outlook, particularly given elevated market pricing for a 25-basis-point rate hike in December.

Global Oil Prices

Oil prices fell by more than 0.5% on Friday, extending losses for a second consecutive day amid growing optimism that the United States and Iran could reach a peace agreement that includes reopening the Strait of Hormuz.

Latest Developments in the Iran Conflict

• Hezbollah’s leader rejected the proposed ceasefire agreement in Lebanon.

• The rejection continues to cloud the outlook for Middle East stability and efforts to end the Iran conflict.

• The Lebanon ceasefire remains linked to broader negotiations between the United States and Iran.

• US President Donald Trump said talks with Iran are progressing well and suggested that meaningful developments could emerge by the end of this week.

• Trump added that he could meet Iran’s Supreme Leader “if an agreement is reached.”

European Interest Rates

• Data released this week showed that inflation in the eurozone accelerated last month, driven by higher energy and services prices as a consequence of the Iran conflict.

• Following those figures, money markets increased the probability of a 25-basis-point European Central Bank rate hike in June from 90% to 95%.

• Sources told Reuters that the ECB is highly likely to raise interest rates in June, given inflation projections that are moving toward a less favorable scenario.