The euro rose in European trading on Tuesday against a basket of global currencies, as part of a recovery attempt from a two-week low against the US dollar, benefiting from a slowdown in the US currency following a report that Trump is seeking to exit the war with Iran.

Following more hawkish comments from the President of the European Central Bank last week, expectations for at least one interest rate hike this year have increased. To reassess those expectations, markets are awaiting the release of key inflation data in Europe later today for March.

Price Overview

Euro exchange rate today: the euro rose about 0.25% against the dollar to $1.1490, up from the session opening level of $1.1464, after hitting a low of $1.1447.

The euro ended Mondays session down about 0.4% against the dollar, marking its fifth consecutive daily loss, and recording a two-week low of $1.1443, amid continued escalation of military confrontations in the Middle East.

US dollar

The dollar index fell 0.3% on Tuesday, retreating from a ten-month high of 100.64 points, reflecting a slowdown in the US currency against a basket of major and minor currencies.

Aside from profit-taking, the US dollar declined following a Wall Street Journal report stating that Trump told his aides he is ready to end the war against Iran even if the Strait of Hormuz remains closed.

European interest rates

ECB President Christine Lagarde said last week that the bank is ready to raise interest rates even if the expected rise in inflation is temporary.

Following those comments, money markets increased pricing for a 25-basis-point rate hike by the European Central Bank at the April meeting from 25% to 35%.

Sources told Reuters that the European Central Bank is likely to begin discussing interest rate hikes next month.

European inflation

To reassess expectations for interest rate changes this year, investors are awaiting the release of key inflation data in Europe later today for March, which will provide insight into the extent of inflationary pressures on policymakers at the European Central Bank.

The annual consumer price index in Europe is due at 09:00 GMT, with market expectations pointing to a 2.6% increase in March, up from 1.9% in February, while core inflation is expected to rise 2.4%, according to the previous reading.

Euro outlook

We expect that if inflation data comes in hotter than currently expected by markets, expectations for European interest rate hikes this year will increase, which would support further recovery in the euro against a basket of global currencies.

Monthly performance

Over the course of March trading, which officially ends with todays settlement, the euro has declined about 2.75% against the US dollar so far, heading for a second consecutive monthly loss and its largest monthly decline since July 2025.

This monthly loss is attributed to investors focusing on buying the US dollar as a preferred safe-haven asset due to concerns related to the impact of the Iran war.

Rising oil and gas prices to multi-year highs are negatively affecting the European economy.