The euro rose in European trading on Tuesday against a basket of global currencies, extending its recovery for a second consecutive session from a three-month low against the US dollar. The move was supported by buying interest at lower levels and improved risk appetite after the halt in military escalation between Iran and Israel, strengthening speculation that a final peace agreement in the Middle East may be approaching.

Lower global oil prices are also helping to ease concerns about accelerating inflation, supporting expectations that the European Central Bank may keep its monetary policy tools unchanged for an extended period this year.

Price overview

Euro exchange rate today: The euro rose by around 0.15% against the dollar to $1.1548, up from the opening level of $1.1533. The session low was recorded at $1.1527.

The euro closed Mondays session up 0.1% against the dollar after earlier touching its lowest level in nearly three months at $1.1500.

US dollar

The US Dollar Index fell by approximately 0.15% on Tuesday, extending losses for a second consecutive session and moving further away from its two-month high of 100.21 points, reflecting continued weakness in the US currency against a basket of major and minor currencies.

In addition to profit-taking activity, the dollar has come under pressure following Trumps success in halting the exchange of military strikes between Iran and Israel, while reaffirming commitment to the diplomatic path aimed at ending the conflict and containing geopolitical tensions in the Middle East.

Oil prices

Oil prices declined by more than 1% on Tuesday as military tensions between Iran and Israel eased, boosting expectations that a peace agreement in the Middle East may be near. Such an agreement could help reopen the Strait of Hormuz to stranded oil tankers and restore supply flows to normal levels.

Developments in the Iran conflict

Iran and Israel announced a temporary halt to military strikes.

US President Donald Trump called on both sides to cease hostilities immediately.

Israel believes the brief confrontation may strengthen its position in negotiations.

Israel has largely been excluded from the ongoing US-Iran peace talks.

Pakistani Prime Minister Shehbaz Sharif stated that the ultimate objective of peace negotiations between Washington and Tehran is close to being achieved.

Trump and Vice President JD Vance said Washington expects to declare a complete victory and reach a long-term settlement of the Iranian nuclear issue within the next two weeks.

Trump said: We are in the final stages of reaching an agreement with Iran, and we want to get this resolved.

Trump added: I do not believe there are any major sticking points with the Iranians, and we are very close to reaching an agreement.

European interest rates

As oil prices declined, money markets reduced the probability of a 25-basis-point interest rate increase by the European Central Bank in June from 95% to 85%.

Investors are now awaiting additional economic data from the eurozone, particularly inflation, unemployment, and wage figures, to reassess interest rate expectations.

Reuters sources indicated that the European Central Bank is still highly likely to raise interest rates in June, given inflation forecasts that continue to point toward an undesirable scenario.