Renewed US-Iran deal optimism lifts the euro, reducing near-term ECB hike odds below 50% for next month.
The euro climbed toward 1.1600 against the dollar as hopes for a US-Iran deal eased energy supply concerns. EUR/USD remains within its year-long 1.1400-1.1800 range, supported by reduced geopolitical risks in the Middle East.
The European Central Bank delivered its first rate hike in response to the energy shock but avoided committing to consecutive increases. Markets now price the probability of another hike next month below 50%, down from earlier expectations.
A potential reopening of the Strait of Hormuz could further stabilize the euro, limiting downside risks. The ECB retains flexibility to pause if conditions improve, keeping policy data-dependent.