The euro rose in the European market on Friday against a basket of global currencies, resuming gains that were temporarily halted yesterday against the US dollar, approaching once again its highest levels in three weeks, benefiting from renewed weakness in the US currency amid hopes that the Iranian war truce will continue to hold despite escalating military tensions between the United States and Iran in the Strait of Hormuz.

With pricing for the probability of a European interest rate hike in June declining, traders are awaiting later today a speech by European Central Bank President Christine Lagarde, which may include further signals regarding inflation developments and the path of monetary policy in the eurozone.

Price Overview

The euro exchange rate today: The euro rose against the dollar by 0.2% to $1.1748, from the opening level of $1.1724, and recorded a low of $1.1721.

The euro ended Thursdays trading down by 0.2% against the dollar, marking its first loss in the past three days, due to correction and profit-taking operations after recording its highest level in three weeks at $1.1797 in the previous session.

Aside from profit-taking sales, the euro declined due to risk aversion following exchanges of fire between the United States and Iran in the Strait of Hormuz.

The US dollar

The dollar index fell on Friday by 0.2%, resuming losses that were temporarily halted in the previous session and moving closer again to its lowest level in three months, reflecting declining levels of the US currency against a basket of major and secondary currencies.

This decline comes amid a relative improvement in market risk sentiment, with growing hopes that the Iranian war truce will continue to hold, especially in light of the current calm between US naval forces and Irans Revolutionary Guard in the Strait of Hormuz.

US Central Command (CENTCOM) had announced on Thursday that three naval destroyers came under attacks involving missiles, drones, and fast boats while crossing the strait, with US forces responding through self-defense strikes targeting missile and drone launch sites as well as military facilities in Bandar Abbas and Qeshm Island.

President Trump described the latest US strikes as merely a light slap, stressing that the ceasefire agreement remains in place and effective despite these skirmishes.

Tehran accused Washington of violating the truce and targeting two Iranian vessels and civilian areas, while announcing that its air defenses intercepted hostile targets over Tehran and coastal regions.

Chris Weston, head of research at Pepperstone, said: The path toward a lasting peace agreement is not easy at all. He added: Traders have been forced to reconsider the assumptions built during recent sessions regarding the course of the conflict and the normalization of shipping traffic through the Strait of Hormuz.

Later today, the US jobs report for April will be released, which the Federal Reserve relies on heavily in determining the appropriate monetary policy tools in response to economic developments in the United States.

European interest rates

With global oil prices declining this week, money market pricing for the probability of the European Central Bank raising European interest rates by 25 basis points in June fell from 55% to 45%.

In order to reprice the above probabilities, investors are awaiting later today a speech by European Central Bank President Christine Lagarde at the Bank of Spain economic forum.