The euro declined in the European market on Tuesday against a basket of global currencies, extending its losses for the third consecutive day against the US dollar, as investors continued to focus on buying the US currency as the best alternative investment, amid escalating tensions between the United States and Iran in the Strait of Hormuz.

Amid elevated pricing of the chances of raising European interest rates in June, markets later today await an important speech by European Central Bank President Christine Lagarde, which may include further signals about the path of monetary policy in the eurozone during this year.

Price Overview

The euro exchange rate today: The euro fell against the dollar by 0.1% to $1.1677, from the day’s opening price at $1.1687, and recorded a high of $1.1694.

The euro ended Monday’s trading down by about 0.3% against the dollar, marking its second consecutive daily loss, due to escalating military tensions between the United States and Iran in the Strait of Hormuz.

The US dollar

The dollar index rose on Tuesday by 0.1%, extending its gains for the third consecutive session, reflecting the continued rise of the US currency levels against a basket of major and secondary currencies.

This rise comes as investors continue to focus on buying the US dollar as a safe haven, amid escalating tensions between the United States and Iran over control of the Strait of Hormuz, which may lead to renewed military confrontations and increases uncertainty in global markets.

Hormuz tensions

Tensions escalated between the United States and Iran over control of the waters of the Arabian Gulf, as the US military announced it had destroyed six small Iranian boats and intercepted cruise missiles and Iranian drones, while the Iranian military confirmed targeting a US frigate with missiles in the Strait of Hormuz.

US President Donald Trump issued a strong warning to Iran if naval vessels were fired upon while protecting navigation, while Iran confirmed it would not allow US ships to pass through the Strait of Hormuz.

Starting Monday, Trump launched a naval operation aimed at breaking the Iranian blockade imposed on the Strait of Hormuz and escorting stranded ships to exit.

European interest rates

Money markets’ pricing of the probability that the European Central Bank will raise European interest rates by about 25 basis points in June is currently stable around 55%.

In order to reprice the above probabilities, investors are awaiting the release of more economic data in the eurozone on inflation, unemployment, and wages levels.

At 12:30 GMT, European Central Bank President Christine Lagarde will deliver an important speech at the opening of a conference in Frankfurt, which may include further signals about inflation developments in the eurozone and interest rate expectations in the coming period.

The Australian dollar declined in the Asian market on Tuesday against a basket of global currencies, continuing its losses for a second consecutive day against its U.S. counterpart. The currency moved further away from its four-year high as correction and profit-taking operations persisted.

These operations currently outweigh the impact of the Reserve Bank of Australia’s (RBA) monetary policy decisions, which included raising interest rates to their highest level since 2024, marking the third consecutive increase in Australian rates.

Investors are awaiting the upcoming press conference by RBA Governor Michele Bullock for further clues regarding the bank’s continued normalization of monetary policy and the potential for another rate hike in June.

Price Overview

* Australian Dollar Exchange Rate Today: The Australian dollar fell against the U.S. dollar by 0.2% to (0.7153), from an opening price of (0.7167), after recording a session high of (0.7173).

* The Australian dollar ended Monday's trading down 0.5% against the U.S. dollar—its first loss in three days—due to profit-taking after hitting a four-year high of 72.28 cents in the previous session.

Reserve Bank of Australia Decision

In line with expectations, the RBA Monetary Policy Committee decided on Tuesday to raise the benchmark interest rate by 25 basis points to 4.35%, the highest level since December 2024.

Key details from the meeting:

* Vote Count: Eight board members voted in favor of the increase, while one member voted against, reflecting a strong consensus within the bank to continue monetary tightening.

* Inflation Drivers: The bank attributed the decision to persistent inflation, which reached 4.6% in March. This was driven primarily by a spike in fuel prices resulting from the war in the Middle East and supply disruptions in the Strait of Hormuz.

* Economic Outlook: The RBA warned that inflation will remain above the 2-3% target range for longer than previously anticipated, requiring proactive measures to prevent these expectations from becoming entrenched in the economy.

* Geopolitical Impact: The bank noted that the ongoing naval blockade and the closure of the Strait of Hormuz represent the greatest current challenge to the Australian economy, leading to increased transport and production costs.

* Data Trends: The RBA emphasized that a wide range of data from recent months shows that inflationary pressures significantly increased in the second half of 2025.

Interest Rate Forecast

* Market pricing for the probability of the RBA raising interest rates by another 25 basis points in June is currently stable around 75%.

* Investors are closely monitoring upcoming data on inflation, unemployment, and wages in Australia to refine these expectations.

* Governor Michele Bullock is scheduled to speak shortly in a press conference to discuss the monetary policy decisions and recent economic developments in further detail.

Oil prices pared gains made earlier in Monday's session after the U.S. military announced that two U.S. Navy guided-missile destroyers entered the Gulf region to break the Iranian blockade, and that two American vessels successfully transited the Strait of Hormuz.

This followed earlier Iranian claims that it had prevented a U.S. warship from entering the Gulf.

Brent crude futures rose by $2.05, or 1.9%, to $110.22 per barrel by 13:07 GMT, after touching a session high of $114.30. U.S. West Texas Intermediate (WTI) rose by 47 cents, or 0.5%, to $102.41 per barrel, after previously reaching $107.46.

Prices had jumped following a report by Iran’s Fars News Agency, which cited local sources claiming Tehran targeted a U.S. warship intending to cross the Strait and forced it to retreat. U.S. Central Command (CENTCOM) denied the report, confirming that no U.S. Navy ship had been attacked.

Giovanni Staunovo, an analyst at UBS, noted that the price trajectory remains tilted to the upside as long as restrictions on oil flows through the Strait persist.

President Donald Trump announced that the United States would begin efforts to assist stranded vessels in the Strait; however, prices remained above the $100 per barrel mark in the absence of a peace agreement and the continuation of shipping restrictions through the strategic waterway.

In response, Iranian forces warned the U.S. against entering the Strait, asserting they would "respond forcefully" to any threat. While Trump has prioritized a new nuclear deal, Iran seeks to delay nuclear talks until after the conflict ends, demanding the lifting of the mutual naval blockade in the Gulf first.

In a related development, the United Arab Emirates accused Iran of launching a drone attack on an empty ADNOC crude oil tanker attempting to transit the Strait.

Separately, OPEC+ announced on Sunday that it would raise oil production targets by 188,000 barrels per day in June for seven of its members, marking the third consecutive monthly increase. This increase matches the amount agreed upon for May, excluding the quota for the UAE, which left OPEC on May 1. However, these increases are expected to have limited actual impact while the war continues to disrupt Gulf oil supplies.

U.S. President Donald Trump may soon face pressure to decide on restricting American crude oil exports, which recently hit record levels. If continued, this trend could drive up prices for gasoline, diesel, and other petroleum products for U.S. consumers.

Countries worldwide are racing to secure oil supplies that have dropped sharply due to Iran closing the Strait of Hormuz to tankers from "hostile nations," including major producers like Kuwait, Saudi Arabia, and the United Arab Emirates. Simultaneously, the U.S. Navy has imposed a blockade on Iranian ships exiting ports through the Strait, though its effectiveness remains a subject of debate.

In a televised speech on April 1, Trump stated: "To the countries that can't get fuel—many of whom refused to participate in the operation to topple the Iranian regime, forcing us to do it ourselves—I have a proposal: First, buy your oil from the United States of America; we have plenty."

The United States is the world's largest crude oil producer, reaching 13.6 million barrels per day (bpd) as of February, compared to Russia in second place at 9.9 million bpd. The U.S. is also the largest consumer, refining 21.1 million bpd of finished petroleum products as of late April.

This figure includes approximately 2 million bpd of natural gas liquids, which are not a direct part of traditional crude oil refining. Subtracting this leaves about 19.1 million bpd against a domestic production of 13.6 million bpd. This explains the continued U.S. reliance on crude imports, with the gap filled by oil imports and "refining gain"—the increase in product volume after the refining process.

According to U.S. Energy Information Administration (EIA) estimates, refining gain accounts for about 6.3% of total refinery input, or roughly 1.2 million bpd.

While a portion of U.S. refinery products like gasoline, diesel, and jet fuel is exported, domestic consumption remains the largest segment. Releases from the Strategic Petroleum Reserve (SPR) temporarily turned the U.S. into a net exporter of crude oil, but this was primarily driven by the re-export of some of these supplies.

However, these supplies are not unlimited, and there are engineering and legal constraints on SPR storage levels, meaning this policy cannot be sustained indefinitely.

U.S. laws allow oil companies to sell products freely on global markets, leading tankers to U.S. ports to ship oil to Asia, where prices can be significantly higher. This price differential exerts additional upward pressure on domestic U.S. prices, raising political questions about whether exports should be restricted to maintain internal price stability.

This issue extends beyond oil; the U.S. is also the world's largest exporter of liquefied natural gas (LNG), creating a similar effect where domestic prices are tethered to global markets.

Energy markets have faced massive disruption due to the war with Iran and the closure of the Strait of Hormuz, sparking a global race to secure supplies. Some nations, such as China and Thailand, have resorted to precautionary stockpiling. This raises questions about whether other countries, including the United States, might restrict exports if the crisis persists, especially amid mounting economic pressure and market instability.