The euro rose in European trade on Tuesday against a basket of major rivals, expanding the gains for the fourth straight session against the dollar and approaching a four-year peak as the risk appetite improved in the markets with the US dollar dropping after an Israel-Iran ceasefire agreement.
The odds of an ECB interest rate cut in July also dropped as investors await more clues on the path ahead of European policy easing in the second half of the year.
The Price
The EUR/USD price rose 0.35% today to $1.1614, with a session-low at $1.1574.
The euro closed up 0.5% on Monday, the third profit in a row, approaching a four-year peak at $1.1631.
Ceasefire
US President Donald Trump announced a ceasefire agreement between Iran and Israel, to get into effect in a few hours.
The deal, reached with Qatari help and US coordination, stipulates an Iranian ceasefire first, followed by Israel in 12 hours, then the announcement of the end of the 12-day war in 24 hours.
Trump lauded the agreement which avoided a war that would’ve destroyed the Middle East.
US Dollar
The dollar index fell 0.3% on Tuesday away from a four-week high at 99.42 against a basket of major rivals.
The dollar fell as the risk appetite improved in most global markets following the Iran-Israel ceasefire.
Later today, Fed Chair Jerome Powell is scheduled to testify ahead of the House of Parliament in Washington.
European Rates
ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.
According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.
The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues.
