A deal to reopen the Strait of Hormuz boosts risk sentiment, lifting the Euro against the Dollar ahead of the Fed’s rate decision.
The EUR/USD pair climbed to around 1.1590 in early Asian trading on Tuesday, driven by a US-Iran agreement to reopen the Strait of Hormuz. The deal, signed by US and Iranian officials, ends a blockade and initiates 60 days of nuclear negotiations, supporting risk assets like the Euro.
Traders remain cautious as both sides differ on key terms, including Iran’s demand for fees in the waterway. The Fed’s upcoming rate decision, expected to hold rates at 3.50%-3.75%, will be closely watched for signals on future policy under new chair Kevin Warsh.
Market reaction has been muted but positive, with the Euro gaining ground as geopolitical tensions ease. Any hawkish Fed remarks could cap the Dollar’s losses and pressure the pair.