FX.co ★ Euro Nears $1.18 on Middle East Talk Hopes

The euro advanced toward $1.18, marking its strongest level since before the late-February outbreak of war, as investors grew more optimistic about potential Middle East peace talks. This improved sentiment emerged despite the United States maintaining its blockade of Iranian ports, underscoring a complex geopolitical backdrop. Negotiators from the US and Iran may return to Islamabad this week, only days after their most recent round of discussions ended without a breakthrough. Even so, the prospect of renewed dialogue was sufficient to trigger a shift into riskier assets, while oil prices slipped back below $100 per barrel. Nonetheless, inflationary pressures stemming from elevated energy costs are expected to persist as long as the Strait of Hormuz remains closed, leading markets to anticipate a more hawkish stance from the European Central Bank. Traders are now pricing in at least two interest-rate increases by the end of the year.