FX.co ★ Euro Holds Close to 7-Week High

The euro traded near $1.154, hovering close to a seven-week high as easing energy prices bolstered expectations that inflationary pressures in the Euro Area will continue to moderate. Market sentiment improved after Iran and Oman agreed on a proposed shipping corridor through the Strait of Hormuz, raising hopes that this critical waterway could soon reopen and help restore energy supplies from the Middle East.

Brent crude remained below $80 per barrel, strengthening the view that lower energy costs could ease the pressure on central banks to tighten monetary policy further. Money markets now fully price in just one additional European Central Bank rate hike by year-end, with roughly a 40% chance of a second, after the ECB left interest rates unchanged at its most recent meeting. At the same time, stronger-than-expected German factory orders in June added to evidence that Europe’s largest economy may finally be gaining momentum.