The euro (EUR) dipped below 1.1600 on Wednesday but has slightly increased, likely due to growing speculation about a potential deal between the US and Iran, alongside the Federal Reserve’s hawkish stance revealed in its recent monetary policy meeting. As of now, the EUR/USD exchange rate stands at 1.1622, marking an increase of 0.19%.
EUR/USD rises as weaker oil offsets hawkish Fed policy
Market sentiment shifted positively following news that the US is close to finalizing a deal with Iran. President Trump mentioned that negotiations are in their closing stages, though he cautioned Iran that not reaching an agreement could lead to military action against them.
This announcement led to a drop in oil prices, with the US crude oil benchmark, WTI, now trading around $98.45 per barrel — a loss exceeding 5%. The connection between WTI prices and the US dollar contributed to a dip in the dollar’s value, as reflected by the US dollar index (DXY).
The DXY, which gauges the dollar’s strength against six other currencies, fell by 0.19% to 99.11.
Additionally, a recent report from the Financial Times noted that “two supertankers heading to China have traversed the Strait of Hormuz.” This possibility of reopening the Strait could, perhaps, mitigate inflation, drive energy prices down, and lessen the risk of global stagflation.
In the US, notes from the Fed’s last meeting indicated that many members of the FOMC maintain a hawkish viewpoint, suggesting potential policy adjustments if inflation remains above the 2% target.
This April meeting was notable, with an increased number of officials indicating that raising interest rates could be appropriate if inflation persists at high levels. The minutes revealed that “participants acknowledged the Middle East conflict might significantly impact risk balance and suitable policy paths.”
Market participants have priced in nearly a 50% likelihood of a rate adjustment during the FOMC’s December meeting.
ECB expects interest rate hike at June board meeting
In Europe, the latest inflation data indicating rates above 3% serves as a clear signal from numerous European Central Bank (ECB) officials that action is necessary at the council meeting in June.
The ECB addressed potential rate hikes during its April meeting, and the upcoming June 11 meeting marks the first time it may raise deposit rates.
Data from Prime Terminal reveals an approximated 82% chance of a 25 basis points increase.
ECB President Kocher indicated on Tuesday that a rate hike in June could still be on the table if the situation in Iran doesn’t improve. Similarly, Joachim Nagel from Germany’s Bundesbank shared that the ECB is altering its base case and could indeed take action in June.
François Villeroi from the Banque de France noted that the central bank is “prepared to act if needed” and that the Iran situation poses risks for both growth and inflation.
EUR/USD Price Prediction: Technical Outlook
Chart analysis shows EUR/USD trading at 1.1623. The pair is currently below the latest triple simple moving average at approximately 1.1649, revealing a slight bearish trend, as it remains constrained beneath a significant resistance level. Although the broader framework indicates an expected downtrend resistance from 1.1929, the relative strength index (14) hovering around 42 suggests that upward momentum is fading rather than indicating oversold conditions.
If there is a recovery attempt, the first resistance should appear at the triple moving average near 1.1649, with the downtrend line from 1.1929 reinforcing the upper limit. On the downside, initial support is anticipated around the past uptrend break point near 1.1578, followed by stronger interest from buyers as the correction intensifies, around a more foundational uptrend near 1.1411.
This week’s euro price
The table below shows the percentage change of the Euro (EUR) against major currencies this week. The euro was the strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.84% | 0.08% | -0.07% | 0.01% | -0.31% | 0.05% | |
| EUR | 0.03% | -0.82% | 0.17% | -0.05% | 0.03% | -0.21% | 0.05% | |
| GBP | 0.84% | 0.82% | 0.94% | 0.77% | 0.86% | 0.62% | 0.86% | |
| JPY | -0.08% | -0.17% | -0.94% | -0.22% | -0.14% | -0.41% | -0.10% | |
| CAD | 0.07% | 0.05% | -0.77% | 0.22% | 0.01% | -0.20% | 0.08% | |
| australian dollar | -0.01% | -0.03% | -0.86% | 0.14% | -0.01% | -0.24% | 0.11% | |
| new zealand dollar | 0.31% | 0.21% | -0.62% | 0.41% | 0.20% | 0.24% | 0.24% | |
| swiss franc | -0.05% | -0.05% | -0.86% | 0.10% | -0.08% | -0.11% | -0.24% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select EUR from the left column and move to USD along the horizontal line, the percentage change displayed in the box represents EUR (Basic)/USD (Quote).
