The euro declined in the European market on Tuesday against a basket of global currencies, extending its losses for the third consecutive day against the US dollar, as investors continued to focus on buying the US currency as the best alternative investment, amid escalating tensions between the United States and Iran in the Strait of Hormuz.

Amid elevated pricing of the chances of raising European interest rates in June, markets later today await an important speech by European Central Bank President Christine Lagarde, which may include further signals about the path of monetary policy in the eurozone during this year.

Price Overview

The euro exchange rate today: The euro fell against the dollar by 0.1% to $1.1677, from the days opening price at $1.1687, and recorded a high of $1.1694.

The euro ended Mondays trading down by about 0.3% against the dollar, marking its second consecutive daily loss, due to escalating military tensions between the United States and Iran in the Strait of Hormuz.

The US dollar

The dollar index rose on Tuesday by 0.1%, extending its gains for the third consecutive session, reflecting the continued rise of the US currency levels against a basket of major and secondary currencies.

This rise comes as investors continue to focus on buying the US dollar as a safe haven, amid escalating tensions between the United States and Iran over control of the Strait of Hormuz, which may lead to renewed military confrontations and increases uncertainty in global markets.

Hormuz tensions

Tensions escalated between the United States and Iran over control of the waters of the Arabian Gulf, as the US military announced it had destroyed six small Iranian boats and intercepted cruise missiles and Iranian drones, while the Iranian military confirmed targeting a US frigate with missiles in the Strait of Hormuz.

US President Donald Trump issued a strong warning to Iran if naval vessels were fired upon while protecting navigation, while Iran confirmed it would not allow US ships to pass through the Strait of Hormuz.

Starting Monday, Trump launched a naval operation aimed at breaking the Iranian blockade imposed on the Strait of Hormuz and escorting stranded ships to exit.

European interest rates

Money markets pricing of the probability that the European Central Bank will raise European interest rates by about 25 basis points in June is currently stable around 55%.

In order to reprice the above probabilities, investors are awaiting the release of more economic data in the eurozone on inflation, unemployment, and wages levels.

At 12:30 GMT, European Central Bank President Christine Lagarde will deliver an important speech at the opening of a conference in Frankfurt, which may include further signals about inflation developments in the eurozone and interest rate expectations in the coming period.