The euro rose in European trading on Thursday against a basket of global currencies, beginning to recover after two days of losses against the US dollar, benefiting from a slowdown in the US currency amid growing optimism over a potential halt in the Iran war.

Following more hawkish comments from the President of the European Central Bank, expectations for at least one interest rate hike this year have increased. To reassess those expectations, markets are awaiting further data on developments in the eurozone economy.

Price Overview

Euro exchange rate today: the euro rose 0.1% against the dollar to $1.1572, up from the session opening level of $1.1558, after hitting a low of $1.1554.

The euro ended Wednesdays session down 0.4% against the dollar, marking its second consecutive daily loss, after Iran denied entering negotiations with the United States to end the war in the Middle East.

US dollar

The dollar index fell 0.1% on Thursday, marking its first decline in the past three sessions, reflecting a slowdown in the US currency against a basket of global currencies.

This comes as traders assess the likelihood of a halt in the war in the Middle East, amid intensified diplomatic efforts aimed at containing the escalation, with cautious anticipation of any signals that could pave the way for a de-escalation agreement or ceasefire.

Iran war developments

US President Donald Trump said that Iran is making strong efforts to reach an agreement to end nearly four weeks of fighting, contradicting remarks by Irans foreign minister, who said the country is reviewing a US proposal but does not intend to hold talks to end the conflict.

Iranian Foreign Minister Abbas Araghchi said that although there is no dialogue or negotiations with the United States, various messages have been exchanged through intermediaries.

Araghchi added in an interview with state television on Wednesday that conveying messages through friendly countries and clarifying positions or issuing necessary warnings does not constitute negotiations or dialogue.

Trump later said on Wednesday during an event in Washington that Iranian leaders are negotiating and are eager to reach a deal, but are reluctant to say so publicly.

The New York Times reported that the United States has sent Iran a plan consisting of 15 key points to end the war in the Middle East.

Sources said a one-month ceasefire will be announced under a mechanism being developed by Witkoff and Kushner, with negotiations on the fifteen points to take place during the ceasefire period.

European interest rates

ECB President Christine Lagarde said on Wednesday that the bank is ready to raise interest rates even if the expected rise in inflation is temporary.

Following those comments, money markets increased pricing for a 25-basis-point rate hike by the European Central Bank at the April meeting from 25% to 35%.

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

To reassess these expectations, investors are awaiting further economic data from the eurozone on inflation, unemployment, and wage levels.