The EUR/USD currency pair advanced to around 1.1590 during the early Asian session on Tuesday, buoyed by news of a deal between the United States and Iran to reopen the Strait of Hormuz and end a US blockade of Iranian ports [1]. The agreement, virtually signed by US President Donald Trump, Vice President JD Vance, and Iranian Parliament Speaker Mohammad Bagher Ghalibaf, also initiates 60 days of nuclear negotiations between the two countries [1]. This development sparked a rally in riskier assets, including the Euro, as hopes for a US-Iran peace agreement provided near-term support for the shared currency [1].
Despite the positive market reaction, caution remains due to differing accounts from the US and Iran on key issues. Iran intends to collect certain 'fees' for passage through the Strait, while President Trump stated the waterway would fully reopen on Friday without tolls [1]. Trump also warned that if Iran fails to reach a final nuclear accord with the US, he would resume military attacks on Tehran [1].
Market participants are also closely watching the upcoming US Federal Reserve interest rate decision, scheduled for Wednesday. The Fed is widely expected to keep its benchmark rate unchanged at 3.50% to 3.75% [1]. Traders are particularly interested in the press conference and any signals from new Fed chair Kevin Warsh regarding future monetary policy direction. Hawkish remarks from Fed policymakers could potentially limit losses in the US Dollar and act as a headwind for further Euro gains [1].
CONCLUSION
The Euro's rise toward 1.1600 was driven by optimism over the US-Iran Strait of Hormuz deal, though uncertainties remain due to unresolved issues between the two sides. The upcoming Federal Reserve decision and commentary from its new chair are likely to influence the next moves in the EUR/USD pair.