The Euro declined in the European market on Thursday against a basket of global currencies, deepening its losses for the third consecutive day against the U.S. dollar. It reached its lowest level in ten days as investors focused on purchasing the American currency as the preferred alternative investment amid escalating tensions between the United States and Iran in the Strait of Hormuz, with both sides exchanging control over ships and oil tankers.

The current rise in global oil prices increases indications of growing inflationary pressures on monetary policymakers at the European Central Bank (ECB) and boosts the probability of European interest rate hikes this year. To re-price these probabilities, traders await the release of key European sector data for April later today.

Price Overview

- Euro Exchange Rate Today: The Euro fell against the dollar by more than 0.1% to ($1.1692), the lowest since April 13, from todays opening price of ($1.1705), while reaching a high of ($1.1714).

- The Euro ended Wednesday's trading down 0.3% against the dollar, its second consecutive daily loss, due to escalating geopolitical tensions in the Middle East.

The U.S. Dollar

The dollar index rose by more than 0.1% on Thursday, extending its gains for the third consecutive session and recording its highest level in over a week. This reflects the continued rise of the American currency against a basket of global currencies.

This ascent comes as investors focus on buying the U.S. dollar as a safe haven, as the United States and Iran remain at odds over the ceasefire, the blockade, nuclear files, and control of the Strait.

These disputes keep the strategic waterway effectively closed and threaten an energy sector shock that could damage global economies.

Skye Masters, head of markets research at National Australia Bank, stated: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Masters added that extreme economic and trade risks are undervalued, and inflationary pressures will persist until the end of the year.

Iranian War Updates

- The United States intercepts three Iranian oil tankers in Asian waters.

- Iran seizes two cargo ships in the Strait of Hormuz on Wednesday.

- Navigation in the Strait of Hormuz is nearly at a standstill.

- The United Kingdom announced that two vessels were attacked in the Strait of Hormuz.

- Trump hints at the possibility of a second round of negotiations in Pakistan tomorrow, Friday.

- Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf stated that a full ceasefire would only be logical if the blockade is lifted.

Global Oil Prices

Global oil prices rose by more than 4% on Thursday, extending gains for the fourth consecutive day and reaching a two-week high. This comes amid mounting fears of energy supply disruptions from the Arabian Gulf region as the Strait of Hormuz remains closed to oil tankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may push global central banks to raise interest rates in the near terma sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

European Interest Rates

- With the rise in global oil prices, money market pricing for the probability of the ECB raising European interest rates by 25 basis points in April increased from 20% to 30%.

- To re-price these probabilities, investors await the release of key sector data for the European economy later today.

- ECB President Christine Lagarde stated: The bank is prepared to raise interest rates even if the expected rise in inflation is short-term.

- Sources told Reuters that the ECB is likely to begin discussing interest rate hikes during this month's meeting.