The euro rose to $1.175 as cautious optimism grew over a potential resolution in the Middle East following the extension of the ceasefire. US President Trump indefinitely prolonged the ceasefire with Iran, despite stalled negotiations and the ongoing US naval blockade in the Strait of Hormuz. He acknowledged Pakistan’s role as a mediator urging restraint, but insisted the blockade would remain in place unless Iran makes concessions. Iran’s Tasnim news agency, however, reported indications of possible US flexibility on the matter.
At the same time, expectations for European Central Bank interest-rate hikes have been modestly reduced, although two increases are still projected this year. This adjustment reflects easing inflationary pressure from lower oil prices, as well as the uncertainty surrounding the US-Iran standoff, despite the extended ceasefire.
