A breakthrough US-Iran agreement to reopen the Strait of Hormuz lifts market sentiment, driving the Euro higher against the Dollar.
The EUR/USD pair climbed to near 1.1610 in early European trading Monday, supported by reports of a US-Iran deal to reopen the Strait of Hormuz. The agreement, set to be signed in Switzerland on Friday, has eased geopolitical tensions and improved risk sentiment.
The US Federal Reserve’s interest rate decision on Wednesday remains a key focus, with markets expecting rates to hold at 3.50%-3.75%. Traders will scrutinize Fed Chair Kevin Warsh’s remarks for hints on future policy. Last week, the ECB raised rates for the first time since September 2023, citing inflation pressures from the Middle East conflict.
US President Donald Trump confirmed the lifting of the naval blockade on Iranian ports, further reducing regional risks. Any hawkish signals from the Fed could pressure the EUR/USD pair.