The Euro surged past $1.16, marking a new high for 2021, largely due to a weakened dollar, as traders closely monitor the ongoing situation in the Middle East. President Trump has announced a ceasefire between Israel and Iran, which has alleviated some concerns about potential supply chain disruptions in the energy sector. However, the truce appears fragile, with Israel already accusing Iran of breaching the agreement.
On the economic landscape, Germany's Ifo business climate index has risen to its highest point in almost a year. Nonetheless, preliminary PMI data presents a mixed view, indicating signs of stabilization in the Eurozone's private sector activity.
Regarding monetary policy, market analysts are still predicting a 25 basis point rate cut by the European Central Bank (ECB) before the year's end. ECB President Christine Lagarde commented that current interest-rate levels are well-suited to manage the prevailing uncertainties. Meanwhile, Governing Council member Villeroy de Galhau noted that the ECB retains the option to reduce rates in the forthcoming six months.
