Euro under pressure on peace talks outlook

The euro declined in European trading on Friday against a basket of global currencies, extending its losses for a second consecutive session against the US dollar and trading near six-week lows, as investors continued favoring the US currency as the preferred alternative safe-haven investment while awaiting further developments in peace talks between the United States and Iran.

This week saw increased pricing for the possibility of the European Central Bank raising interest rates at its June meeting, while investors await further economic data from the eurozone to reassess those expectations.

Price Overview

• Euro exchange rate today: The euro declined against the dollar by 0.1% to $1.1605, from today’s opening level at $1.1617, while recording a session high at $1.1621.

• The euro ended Thursday’s trading down by less than 0.1% against the dollar, resuming losses that had paused the previous day during recovery attempts from a six-week low at $1.1583.

US Dollar

The US Dollar Index rose 0.1% on Friday, maintaining gains for a second consecutive session near six-week highs, reflecting the continued positive performance of the US currency against a basket of global currencies.

In addition to support from the recent broad rise in long-term US Treasury yields, investors continue favoring the US dollar as a safe haven amid close monitoring of developments in peace negotiations between the United States and Iran.

US-Iran Talks

• Iranian news agencies: The final version of the US-Iran agreement has been reached through Pakistani mediation, with an official announcement expected within the next few hours.

• US Secretary of State Marco Rubio said there are “good signs” regarding the possibility of reaching a peace agreement.

• Donald Trump: The United States is in the final stages of talks with Iran.

• Reports: Iran’s uranium stockpile and control over the Strait of Hormuz remain key points of disagreement between Washington and Tehran.

European Interest Rates

• Sources told Reuters: The European Central Bank is highly likely to raise interest rates in June due to inflation expectations moving toward an undesirable scenario.

• This week, money market pricing for the probability of the European Central Bank raising interest rates by 25 basis points in June increased from 60% to above 70%.

• Investors are awaiting further eurozone economic data on inflation, unemployment, and wages to reassess those expectations.