The euro rose in European markets on Tuesday against a basket of global currencies, extending its gains for the seventh consecutive day against the U.S. dollar, recording its highest level in six weeks, benefiting from the drop in the levels of the American currency after a breakthrough in negotiations between the United States and Iran, despite the naval blockade that the U.S. Navy began implementing on the Strait of Hormuz and Iranian ports.

With inflation in the eurozone exceeding the European Central Bank's medium-term target due to high energy prices, the probability of raising European interest rates at least once this year has increased, pending the release of more crucial economic data in Europe.

Price overview

Euro exchange rate today: The euro rose against the dollar by more than 0.1% to ($1.1770), the highest since March 2, from today's opening price of ($1.1758), and recorded a high of ($1.1753).

The euro ended Monday's trading up by 0.3% against the dollar, in its sixth consecutive daily gain, within the longest streak of daily gains this year, thanks to hopes of the continued war truce between the United States and Iran.

The U.S. Dollar

The dollar index fell on Tuesday by 0.1%, deepening its losses for the seventh consecutive session and recording a six-week low, reflecting the continued drop in the levels of the American currency against a basket of global currencies.

This drop comes amid improved risk sentiment in the markets after media reports confirmed the continuation of negotiations between the United States and Iran regarding reaching a lasting peace agreement in the Middle East.

Diplomatic efforts

Diplomatic efforts continue, sponsored by Pakistan and Turkey, to bring viewpoints closer between the United States and Iran and to push toward engaging in a new round of negotiations, following the stumbling of the previous round held in the Pakistani capital, Islamabad, on Friday.

Media reports confirmed that a new round of negotiations between Washington and Tehran may be held in Islamabad next Thursday, with the Swiss capital, Geneva, proposed as a potential alternative for the second round of U.S.-Iranian negotiations.

Keiichi Iguchi, senior strategist at Resona Holdings, said: The series of statements has created some relief in the markets, as it renewed the possibility of reaching a diplomatic solution.

Global oil prices

Global oil prices fell by an average of 1%, with signs appearing that Washington and Tehran may revive peace talks after the United States began a blockade of the Strait of Hormuz.

Undoubtedly, the decline in global oil prices reduces fears of accelerating inflation, which lessens the pressure on global central banks, especially the European Central Bank and the Bank of England, to raise interest rates in the near term.

European interest rates

Lagarde, President of the European Central Bank, said: The bank is ready to raise interest rates even if the expected rise in inflation is short-term.

The money market pricing of the probabilities of the European Central Bank raising European interest rates by about 25 basis points in April is currently stable around 35%.

Sources reported to Reuters that the European Central Bank is likely to begin discussing raising interest rates during the meeting of this month.

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.