FX.co ★ Euro Holds Near Multi-Week High on Middle East Peace Hopes

The euro traded just below $1.18 on Wednesday, hovering near its highest level since before the war broke out in late February, supported by optimism over possible progress in US–Iran peace talks. Mediators reported movement toward extending the ceasefire, with both sides agreeing in principle to continue negotiations centered on Tehran’s nuclear program, the status of the Strait of Hormuz, and potential war-related compensation. US President Donald Trump indicated a deal could be close, though uncertainty lingers following Washington’s announcement that it will deploy an additional 10,000 troops to the region in the near future. Hopes for sustained dialogue pushed oil prices below $100 per barrel and bolstered risk appetite. Still, inflationary pressures from elevated energy costs remain, and markets are now pricing in at least two ECB rate hikes by year-end. On Tuesday, ECB President Christine Lagarde said that higher energy prices have knocked the eurozone off its baseline economic trajectory, but she stopped short of signaling any imminent tightening in monetary policy.