The euro rose in the European market on Friday against a basket of global currencies, resuming gains that were temporarily halted yesterday against the US dollar, approaching once again its highest levels in three weeks, benefiting from renewed weakness in the US currency amid hopes that the Iranian war truce will continue to hold despite escalating military tensions between the United States and Iran in the Strait of Hormuz.

With pricing for the probability of a European interest rate hike in June declining, traders are awaiting later today a speech by European Central Bank President Christine Lagarde, which may include further signals regarding inflation developments and the path of monetary policy in the eurozone.

Price Overview

The euro exchange rate today: The euro rose against the dollar by 0.2% to $1.1748, from the opening level of $1.1724, and recorded a low of $1.1721.

The euro ended Thursday’s trading down by 0.2% against the dollar, marking its first loss in the past three days, due to correction and profit-taking operations after recording its highest level in three weeks at $1.1797 in the previous session.

Aside from profit-taking sales, the euro declined due to risk aversion following exchanges of fire between the United States and Iran in the Strait of Hormuz.

The US dollar

The dollar index fell on Friday by 0.2%, resuming losses that were temporarily halted in the previous session and moving closer again to its lowest level in three months, reflecting declining levels of the US currency against a basket of major and secondary currencies.

This decline comes amid a relative improvement in market risk sentiment, with growing hopes that the Iranian war truce will continue to hold, especially in light of the current calm between US naval forces and Iran’s Revolutionary Guard in the Strait of Hormuz.

US Central Command (CENTCOM) had announced on Thursday that three naval destroyers came under attacks involving missiles, drones, and fast boats while crossing the strait, with US forces responding through “self-defense” strikes targeting missile and drone launch sites as well as military facilities in Bandar Abbas and Qeshm Island.

President Trump described the latest US strikes as merely “a light slap,” stressing that the ceasefire agreement remains “in place and effective” despite these skirmishes.

Tehran accused Washington of violating the truce and targeting two Iranian vessels and civilian areas, while announcing that its air defenses intercepted hostile targets over Tehran and coastal regions.

Chris Weston, head of research at Pepperstone, said: “The path toward a lasting peace agreement is not easy at all.” He added: “Traders have been forced to reconsider the assumptions built during recent sessions regarding the course of the conflict and the normalization of shipping traffic through the Strait of Hormuz.”

Later today, the US jobs report for April will be released, which the Federal Reserve relies on heavily in determining the appropriate monetary policy tools in response to economic developments in the United States.

European interest rates

With global oil prices declining this week, money market pricing for the probability of the European Central Bank raising European interest rates by 25 basis points in June fell from 55% to 45%.

In order to reprice the above probabilities, investors are awaiting later today a speech by European Central Bank President Christine Lagarde at the Bank of Spain economic forum.

The Japanese yen declined in the Asian market on Friday against a basket of major and secondary currencies, extending its losses for the second consecutive day against the US dollar and moving further away from its highest level in three months, amid continued correction and profit-taking operations, alongside renewed buying of the US currency as a safe haven due to renewed military tensions between the United States and Iran in the Strait of Hormuz.

Government data from Japan showed that nominal wage growth slowed more than expected in March, reducing inflationary pressures on policymakers at the Bank of Japan and lowering the probability of a Japanese interest rate hike in June.

Price Overview

Japanese yen exchange rate today: The dollar rose against the yen by about 0.1% to ¥156.99, from the opening level of ¥156.87, and recorded a low of ¥156.71.

The yen ended Thursday’s trading down by 0.35% against the dollar due to correction and profit-taking operations after recording its highest level in three months at ¥155.03 in the previous session.

The US dollar

The dollar index rose on Friday by about 0.1%, extending gains for the second consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

This rise comes amid renewed buying of the US dollar as the best alternative investment, following renewed hostilities between the United States and Iran in the Strait of Hormuz in a clear breach of the ceasefire agreement.

Renewed tensions in Hormuz

US Central Command (CENTCOM) announced that three naval destroyers came under attacks involving missiles, drones, and fast boats while crossing the strait, with US forces responding through “self-defense” strikes targeting missile and drone launch sites as well as military facilities in Bandar Abbas and Qeshm Island.

President Trump described the latest US strikes as merely “a light slap,” stressing that the ceasefire agreement remains “in place and effective” despite these skirmishes.

Tehran accused Washington of violating the truce and targeting two Iranian vessels and civilian areas, while announcing that its air defenses intercepted hostile targets over Tehran and coastal regions.

Chris Weston, head of research at Pepperstone, said: “The path toward a lasting peace agreement is not easy at all.” He added: “Traders have been forced to reconsider the assumptions built during recent sessions regarding the course of the conflict and the normalization of shipping traffic through the Strait of Hormuz.”

Japanese wages

Japan’s Labor Ministry said on Friday that total monthly cash earnings and a separate set of full-time wage figures rose by 2.7% year-on-year in March, below expectations of a 3.2% increase, after wages had risen by 3.4% in February.

There is no doubt that slower Japanese wage growth paves the way for further declines in prices and a slowdown in inflation during the coming period, easing inflationary pressures on policymakers at the Bank of Japan and reducing the likelihood of Japanese interest rate hikes this year.

Japanese interest rates

Following the above data, pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point at the June meeting declined from 65% to 55%.

In order to reprice those probabilities, investors are awaiting the release of more data on inflation, unemployment, and wage levels in Japan.

Gold prices rose to their highest levels in two weeks during Thursday trading, supported by a weaker dollar and falling oil prices, as hopes grew for a peace agreement between the United States and Iran, easing concerns related to inflation and higher interest rates.

Spot gold rose 1% to $4,735.32 per ounce after earlier recording its highest level since April 23. US June gold futures also climbed 1.1% to $4,745.90.

Fawad Razaqzada, market analyst at City Index, said:

“It is all tied to oil prices. When they fall, bond prices tend to rise, leading to lower yields, because investors reduce expectations for interest rate hikes by central banks, and this in turn supports assets such as gold and silver.”

US President Donald Trump had predicted a quick end to the war with Iran, while Tehran is reviewing a US peace proposal that sources said would formally end the conflict but leave some disputed issues unresolved, including Washington’s demands to halt Iran’s nuclear program and reopen the Strait of Hormuz.

Stocks rose on Thursday while oil prices declined again amid growing hopes for an agreement that could gradually reopen the strait.

Meanwhile, the dollar remained near its lowest levels in more than two months, recorded in the previous session, making gold less expensive for holders of other currencies.

Yields on benchmark 10-year US Treasury bonds also declined, reducing the opportunity cost of holding non-yielding gold.

Markets reduced their bets on a US interest rate hike by December to around 12%, compared to 16% on Wednesday, according to data from CME Group’s FedWatch tool.

Investors are now awaiting the US monthly jobs report due on Friday for signals regarding the Federal Reserve’s monetary policy path during the current year.

At the same time, China’s central bank continued increasing its gold reserves for the eighteenth consecutive month, with holdings reaching 74.64 million fine troy ounces at the end of March, compared to 74.38 million ounces in the previous month.

The US-Israeli bombing campaign has destroyed large parts of Iran’s infrastructure and industries, causing disruptions to domestic production and driving up prices of essential food goods.

The US naval blockade has also increased economic pressure on Tehran after disrupting its trade through the Strait of Hormuz, one of the world’s most important maritime corridors, which has effectively been closed since the outbreak of the war on February 28.

In response, Iran has turned to alternative routes by transporting goods via trucks from neighboring Pakistan and Turkey, alongside shipping goods from Russia, its ally, through the Caspian Sea. Tehran is also studying the possibility of transporting oil by rail to China, one of its most important trading partners.

Steve Hanke, professor of applied economics at Johns Hopkins University in Baltimore, said that alternative routes can supply the Iranian economy with consumer goods, food, and industrial materials, but “cannot fully replace the maritime container economy.”

Hanke, who previously served as an economic adviser to former US President Ronald Reagan’s administration, added: “Truck transportation is more expensive, and the capacity of ports and fleets in the Caspian Sea is limited. Therefore, import costs are expected to rise and inflation in tradable goods will increase, but not the economic collapse some have spoken about.”

US President Donald Trump had stated in late April that “Iran’s entire oil infrastructure will explode,” arguing that the US blockade prevents Tehran from exporting oil, the main lifeline of its economy. However, experts question whether closing the Strait of Hormuz can force Iran to surrender or accept a peace agreement under US terms.

Iranian authorities, for their part, confirmed that the US blockade has not affected the country’s ability to provide essential goods and food, pointing to strong domestic production and the existence of alternative import routes.

Iranian Agriculture Minister Gholamreza Nouri said on April 21:

“Despite the US naval blockade, we face no problem in providing essential goods and food, because the size of the country allows imports through various borders.”

Rosemary Kelanic, director of the Middle East Program at the Washington-based Defense Priorities think tank, believes Iran’s geography has reduced the impact of the US naval blockade.

Iran, with a population of about 90 million, has land borders stretching nearly 6,000 kilometers with seven countries, in addition to a 700-kilometer coastline on the Caspian Sea linking it to Central Asia and Russia.

Kelanic said: “Measures such as trucking goods from neighboring countries can compensate for disruptions caused by the blockade, even if the compensation is not complete. Trade volumes may be lower, transportation costs higher, and the type of goods may change, but a wartime economy is capable of finding alternatives.”

She added: “The possibilities for Iranians to bypass Trump’s blockade are endless, because the country possesses thousands of kilometers of land borders.”

Under international law, no blockade is permitted to prevent the flow of food and medicine. It remains unclear whether the United States is obstructing shipments of civilian goods to Iran intentionally or indirectly.

Alternative land routes

Iranian MP Ebrahim Najafi said last month that the country is using land routes through Pakistan, Turkey, Armenia, and Azerbaijan, in addition to the Caspian Sea, to import goods.

On April 25, Pakistan opened its ports to shipments arriving from third countries and heading to Iran, allowing the establishment of six land routes to transport goods from Gwadar, Karachi, and Port Qasim to the Iranian border. These routes are expected to be used mainly for importing rice, meat, and infant formula.

Since the US blockade was imposed on April 13, about 3,000 containers bound for Iran have been stranded at Pakistani ports.

The Kapikoy-Razi crossing also links Iran with Turkey and forms part of a major trade corridor connecting West Asia with Europe. It remains unclear whether Tehran has increased imports through this corridor since the blockade began.

Meanwhile, Russia resumed shipments through the Caspian Sea to Iran’s Bandar Anzali port, located on the world’s largest enclosed body of water.

Israel had targeted Bandar Anzali in airstrikes on March 18, causing damage to the port. Tel Aviv stated at the time that it struck Iranian naval targets and facilities housing dozens of military vessels, including missile boats and patrol ships.

Media reports indicate that Moscow and Tehran use the Caspian Sea to smuggle sanctioned oil and weapons, although the two countries also exchange food commodities through this route. Grain trade between Russia and Iran stopped immediately after the Israeli attack before later resuming.

Kpler, the commodities and shipping analytics company, said that about 12 ships from Russia, Kazakhstan, and Turkmenistan loaded with grain, corn, and sunflower oil have arrived at Iranian ports on the Caspian Sea since mid-April.

Oil via railways

In addition to securing new import routes, Iran is also searching for alternative methods to export oil.

Although the US blockade has severely disrupted Iran’s maritime oil exports, it has not stopped them entirely, as some tankers linked to Iran have managed to bypass the blockade, according to cargo tracking group Vortexa and maritime data company Lloyd’s List.

Experts believe Iran can withstand the blockade for at least two more months, based on the existence of up to 130 million barrels of Iranian oil that were already at sea before the blockade took effect.

Nevertheless, Tehran is turning toward other alternatives, including exporting oil by rail to China, which purchases about 90% of Iran’s oil exports, according to Hamid Hosseini, spokesperson for the Iranian Oil Exporters Union.

Iran’s railway infrastructure is connected to the Chinese cities of Yiwu and Xi’an. The Kazakhstan-Turkmenistan-Iran corridor opened in 2014 and was expanded through the 10,400-kilometer Chinese freight line completed in 2025.

Hanke said: “Railways can transport strategically significant quantities, but in the short term they cannot replace giant oil tankers.”

He added: “Their importance lies partly in logistics and partly in politics, because they operate entirely outside any waterway that Western navies can monitor, and outside the dollar payment system, especially since China has been paying for Iranian oil in yuan since 2012.”

Kelanic, meanwhile, said that transporting oil by sea remains more efficient, but there are land-based methods Iran can use to bypass the US ban.

She added: “Iran can also transport oil by trucks through land routes, as Iraq previously did by moving oil through Syria to the Mediterranean in order to avoid the Strait of Hormuz.”

She continued: “In the short term, quantities will be lower due to the limited number of transport trucks, but importing countries or third parties may provide additional trucks, either as political support for Iran or because they seek greater access to oil in a market suffering from supply shortages.”