FX.co ★ Euro Nears Multi-Week High Amid Geopolitical Tensions

The euro traded just below $1.17, hovering near its highest level since early March and heading for a weekly gain of almost 1.5% against the US dollar. Currency markets remained driven by geopolitical tensions, with investors focused on the fragile US-Iran ceasefire and the peace talks scheduled in Pakistan this weekend. Tehran maintained its near-total blockade of the Strait of Hormuz, triggering the most severe disruption to global energy supplies on record, while insisting that Lebanon be included in any peace negotiations. At the same time, US President Trump sent mixed signals, voicing optimism about a possible agreement before later warning Iran over new fees imposed on ships transiting the strategic waterway.

On the monetary policy front, the surge in oil prices has reignited inflation concerns and led markets to anticipate a more hawkish stance from the European Central Bank. Traders are now pricing in at least two ECB interest rate hikes by the end of 2026, and assign roughly a 30% probability to a third increase.