Euro resumes losses as markets await Trump’s approval of the US-Iran peace agreement

The euro declined in European trading on Friday against a basket of global currencies, resuming losses that were temporarily halted against the US dollar and heading toward a monthly decline in May, weighed down by higher US Treasury yields.

The single European currency came under pressure as the US dollar regained strength, with markets awaiting final approval from President Donald Trump for the preliminary peace agreement between Washington and Tehran.

Price Overview

• Euro exchange rate today: The euro fell more than 0.1% against the dollar to $1.1636, from today’s opening level at $1.1650, and recorded a high of $1.1656.

• The euro ended Thursday’s trading up more than 0.2% against the dollar, its first gain in the past three sessions, as risk appetite improved across markets, particularly amid reports of further progress in peace negotiations between the United States and Iran.

Monthly performance

• During May trading, which officially concludes with today’s settlement, the euro is currently down 0.85% against the US dollar and is on track to post its third monthly loss in the past four months.

• The monthly decline reflects investor preference for the US dollar as a safer alternative investment amid the fallout from the Iranian war and ongoing tensions between the United States and Iran.

• It also comes as the yield on the 10-year US Treasury note has risen to its highest level in a year due to mounting inflationary pressures on the Federal Reserve.

US dollar

The dollar index rose 0.1% on Friday, resuming gains that were temporarily interrupted in the previous session and moving toward a seven-week high, reflecting renewed strength in the US currency against a basket of global currencies.

The rise comes as demand for the US dollar as a safe haven returns amid continued uncertainty surrounding the preliminary peace agreement between the United States and Iran, which is still awaiting final approval from President Donald Trump.

Latest developments in the Iranian war

• The United States and Iran have reached an agreement, but it still requires Trump’s final approval.

• The agreement includes a 60-day ceasefire, the lifting of restrictions on navigation through the Strait of Hormuz, and further nuclear negotiations.

• US President Donald Trump requested a few days to consider the final agreement.

• Iran’s state news agency said the agreement has not yet been finalized.

• The United States warned Oman against becoming involved in Strait of Hormuz transit fees.

European interest rates

• Reuters sources said last week that the European Central Bank is highly likely to raise interest rates in June due to inflation expectations moving toward an undesirable scenario.

• Amid declining global oil prices, money markets reduced pricing for a 25-basis-point European Central Bank rate hike in June from 70% to 55%.

• Investors are awaiting additional economic data from the eurozone on inflation, unemployment, and wages in order to reassess those expectations.