The EUR/USD currency pair rose by 0.12% on Friday, trading at 1.1664, as the US Dollar weakened amid reports that a US-Iran deal is pending approval by the White House and senior Iranian officials. This development comes against the backdrop of ongoing hostilities in the Middle East and hopes for the reopening of the Strait of Hormuz, which have pressured both the US Dollar and crude oil prices. US President Donald Trump posted on social media that Iran must agree never to possess a nuclear weapon and that the Strait of Hormuz must be opened immediately, with water mines to be terminated by Iran. Trump further stated that enriched uranium would be unearthed and destroyed by the United States, in coordination with Iran, China, and the International Atomic Energy Agency [1].
Oil prices responded sharply, with West Texas Intermediate (WTI) falling by 1.50% and extending losses toward $87.20. The US Dollar Index (DXY) declined by 0.17% to 98.81, providing a tailwind for the euro. On the economic front, the Chicago PMI expanded to 62.7, surpassing estimates of 50.5, indicating robust US manufacturing activity [1].
Federal Reserve officials offered mixed commentary: Governor Michelle Bowman noted that the disinflation process has stalled and signaled openness to a policy shift if war-driven inflation broadens. Philadelphia Fed President Anna Paulson highlighted ongoing inflationary pressures complicating business planning, while Kansas City Fed's Jeffrey Schmid warned against treating the oil shock as transitory and emphasized the need for careful monetary tightening [1].
In Europe, German inflation eased in May to 2.7% year-over-year from 2.9%, while core inflation rose to 2.5% from 2.3%. Looking ahead, both the US and Eurozone will release Flash PMIs and the ISM Manufacturing PMI next week, with expectations for a modest deterioration in the US reading [1].
Technically, EUR/USD maintains a constructive near-term bias, trading above key moving averages and trend support, with the Relative Strength Index at 51.5 suggesting modest bullish momentum. Initial resistance is seen at 1.1809, with immediate support near 1.1582 [1].
CONCLUSION
The euro's gains reflect optimism over a potential US-Iran deal and easing Middle East tensions, which have weakened the US Dollar and oil prices. Market sentiment is modestly positive, supported by strong US manufacturing data and easing German inflation, though Fed officials remain cautious about inflation risks. Upcoming economic data from both regions will be closely watched for further direction.