Euro Near Two-Month Low Amid Dollar Strength and Iran Tensions
The euro traded around $1.138, close to its weakest level in two months, as the US dollar remained supported by fading optimism over progress in US-Iran talks and growing expectations of further Federal Reserve rate hikes this year. Iran said it would not soften its conditions for reopening the Strait of Hormuz after President Trump rejected its proposal. Speaking to Axios, Trump said Iran had “overplayed its hand” and that he expected negotiations to resume this week. On the monetary policy front, hawkish remarks from Fed officials, alongside economic data pointing to robust growth and a resilient labor market, have reinforced expectations of tighter US monetary policy. Meanwhile, in Europe, the US-Iran conflict and recent energy-price developments have continued to fuel concerns over renewed inflationary pressure. Money markets are now pricing in roughly 100 basis points of interest-rate hikes by the end of 2027.
138, close to its weakest level in two months, as the US dollar remained supported by fading optimism over progress in US-Iran talks and growing expectations of further Federal Reserve rate hikes this year. Iran said it would not soften its conditions for reopening the Strait of Hormuz after President Trump rejected its proposal. Speaking to Axios, Trump said Iran had “overplayed its hand” and that he expected negotiations to resume this week. On the monetary policy front, hawkish remarks from Fed officials, alongside economic data pointing to robust growth and a resilient labor market, have reinforced expectations of tighter US monetary policy.
Meanwhile, in Europe, the US-Iran conflict and recent energy-price developments have continued to fuel concerns over renewed inflationary pressure. Money markets are now pricing in roughly 100 basis points of interest-rate hikes by the end of 2027.