The euro advanced broadly in European trading on Monday against a basket of major currencies, reaching its highest level in two weeks against the US dollar as positive sentiment swept through financial markets following the announcement of a peace framework between the United States and Iran, which is expected to be formally signed in Switzerland on Friday.

Last week, the European Central Bank raised interest rates for the first time in three years in an effort to contain mounting inflationary pressures stemming from higher energy prices and geopolitical tensions in the Middle East.

The ECB also emphasized that future monetary policy decisions will remain fully dependent on incoming economic data and developments in inflation and economic activity across the eurozone, without committing to a predetermined path for interest rates.

The Price

Euro exchange rate today: The euro rose 0.4% against the US dollar to $1.1617, its highest level since June 5, up from an opening level of $1.1569. The session low also stood at $1.1569.

The euro ended Friday down 0.1% against the dollar, marking its second loss in three sessions amid ongoing geopolitical developments in the Middle East.

The single currency gained 0.4% last week against the dollar, recording its second weekly advance in the past three weeks, supported by the ECB's interest rate increase.

US dollar

The US Dollar Index fell 0.4% on Monday, touching a two-week low of 99.42 and reflecting broad-based weakness in the greenback against a basket of global currencies.

Risk sentiment improved after US and Iranian officials announced agreement on a framework to end the conflict, lift the US blockade on Iran, and reopen the Strait of Hormuz.

Global oil prices

Oil prices fell more than 4% on Monday, extending losses for a third straight session and dropping to their lowest levels in three months as concerns over Middle East supply disruptions eased following the reopening of the Strait of Hormuz.

Developments in the Iran conflict

The United States and Iran have reached a preliminary agreement to end the conflict, with a formal signing expected on Friday in Geneva.

President Donald Trump confirmed the deal and announced the lifting of the naval blockade on Iranian ports, alongside the reopening of the Strait of Hormuz to global shipping traffic.

Pakistani Prime Minister Shehbaz Sharif, who reportedly served as the key mediator, said the agreement includes an immediate and permanent ceasefire across all fronts, including Lebanon.

Mediators have set Friday, June 19, 2026, as the date for the official signing ceremony between US and Iranian delegations in Switzerland.

Under the draft agreement, Tehran has pledged not to pursue nuclear weapons and will accept strict inspection measures.

Iran's Mehr News Agency reported that the memorandum of understanding includes a 60-day negotiation period on the nuclear file and calls for the release of $24 billion in frozen Iranian assets during the talks.

European interest rates

Last Thursday, the European Central Bank raised interest rates by 25 basis points to 2.40%, marking the first ECB rate hike since September 2023 in response to inflationary pressures linked to the Iran conflict.

The ECB acknowledged that the Iran war and the energy crisis have increased inflationary pressures across the eurozone and revised its inflation forecasts higher for 2026 and 2027.

The central bank reiterated that future decisions will depend entirely on incoming economic data, geopolitical developments, and its assessment of core inflation.

Reports indicate that the ECB is considering pausing policy normalization in July if energy prices remain near current levels.

With oil prices falling, money markets have reduced the probability of a 25-basis-point ECB rate hike in July from 50% to 30%.

Expectations for a 25-basis-point increase in September have also declined from 70% to 50%.

Investors are now awaiting additional eurozone data on inflation, unemployment, and wage growth to reassess the outlook for ECB policy.