The euro rose in European trading on Wednesday against a basket of global currencies, extending its gains for the third consecutive day against the US dollar and recording a five-week high, amid improved sentiment in global markets after the United States and Iran agreed on a two-week ceasefire, which includes the opening of the Strait of Hormuz to global navigation.

With the sharp drop in global oil prices, indicators of receding inflationary pressures on monetary policymakers at the European Central Bank are increasing, which reduces the likelihood of raising European interest rates this year.

Price Overview

- Euro exchange rate today: the euro rose against the dollar by 0.9% to ($1.1697), the highest since March 3, from the opening price today at ($1.1593), and recorded a low of ($1.1589).

- The euro ended Tuesday's trading up by 0.45% against the dollar, marking its second consecutive daily gain, amid hopes of reaching a ceasefire agreement in the Middle East under Pakistani sponsorship.

US Dollar

The dollar index fell on Wednesday by 0.7%, deepening its losses for the third consecutive session and recording a four-week low at 98.84 points, reflecting a broad decline in the levels of the American currency against a basket of global currencies.

Risk sentiment in the markets improved, and investor appetite for buying global assets and currencies increased following the ceasefire agreement between the United States and Iran.

Iran War Updates

- Washington and Tehran agree on a two-week ceasefire and plan to open the Strait of Hormuz.

- US President Donald Trump agreed to suspend attacks and aerial bombardment against Iran for 14 days, following intensive Pakistani and Qatari mediation.

- Iran announced its agreement to reopen the Strait of Hormuz to international navigation "fully and safely," with technical coordination with the Iranian armed forces to secure the passage of ships.

- Direct negotiations to end the war are scheduled to begin next Friday in the city of Islamabad in Pakistan, as the truce aims to provide an opportunity for a diplomatic solution.

Global Oil Prices

Global oil prices fell by an average of 13%, recording their lowest levels in several weeks, as concerns over global supply shortages receded, especially after the reopening of the Strait of Hormuz to giant oil tankers.

European Interest Rates

- Following the fall in global oil prices, money market pricing of the probabilities of the European Central Bank raising European interest rates by about 25 basis points in this April fell from 35% to 10%.

- In order to re-price the above probabilities, investors await the release of more economic data in the eurozone regarding the levels of inflation, unemployment, and wages.