The euro fell in European trading on Tuesday against a basket of global currencies, retreating from a two-week high against the US dollar amid corrective activity and profit-taking, as demand returned for the US currency as a preferred safe-haven asset, especially after the United States and Israel launched airstrikes on Iranian energy infrastructure.

Targeting Iranian energy facilities has significantly complicated the diplomatic landscape, as observers believe these strikes undermine already fragile bridges of trust and make it difficult for Tehran to return to the negotiating table under direct military pressure.

To assess the impact of the Iran war and rising energy prices on economic activity in Europe, markets are awaiting the release of key data on the main industrial and services sectors for March later today.

Price Overview

Euro exchange rate today: the euro fell 0.3% against the dollar to $1.1576, down from the session opening level of $1.1612, after reaching a high of $1.1618.

The euro ended Mondays session up 0.35% against the dollar, hitting a two-week high of $1.1640 after Donald Trump announced talks with Iran and delayed any military strikes on Iranian energy facilities for five days.

US dollar

The dollar index rose on Tuesday, beginning to recover from a two-week low, reflecting a renewed rise in the US currency against a basket of global currencies.

The index fell on Monday to its lowest level in two weeks after US President Donald Trump postponed strikes on Irans electricity grid, a move that eased concerns about a prolonged war in the Middle East.

Trump wrote on his Truth Social platform that the United States and Iran had held very good and productive talks on a comprehensive and final resolution to hostilities in the Middle East.

Trump added: I have instructed the Department of War to delay all military strikes on Iranian energy facilities and infrastructure for five days.

According to Iranian news agencies, Iranian officials denied holding any talks with the United States, with some describing such reports as false and aimed only at calming markets.

Contrary to expectations, US and Israeli air forces launched intense strikes on some energy facilities in Iran on Tuesday, a move likely to escalate military confrontations and prompt Irans Revolutionary Guard to carry out missile attacks on energy facilities in Israel and Gulf countries.

European interest rates

The European Central Bank kept interest rates unchanged last week for the sixth consecutive meeting.

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

Following the meeting, money markets increased pricing for a 25-basis-point rate hike by the European Central Bank at the April meeting from 1% to 25%.

To reassess these expectations, investors are awaiting the release of key data on the main sectors of the European economy for March later today.