During Friday’s early Asian session, EUR/USD moves up to about 1.1460. With the US announcing the end of its blockade, the US-Iran interim ceasefire agreement has taken effect. In anticipation of the possibility that the Federal Reserve would start raising interest rates as early as late next month, traders have positioned themselves more and more. Around 1.1460, the EUR/USD pair is recovering some of its earlier losses, essentially completing a two-day slide in the early Asian session on Friday.
Following US President Donald Trump’s signing of an agreement with Iran to put an end to the conflict that has interrupted global energy supplies, the Euro gains strength versus the US dollar. According to reports, the United States and Iran have reached an initial agreement that will start a 60-day negotiating process with the goal of achieving a final resolution to end the dispute. Furthermore, as officials claim that millions of barrels are once again passing through this vital waterway, the US military previously declared that it has lifted its blockade of Iranian ports near the Strait of Hormuz.
In the short run, favourable developments about the US-Iran peace agreement could make riskier assets—like the shared currency—more appealing. On Wednesday, the Federal Open Market Committee unanimously decided to keep its benchmark overnight borrowing rate between 3.5% to 3.75%. “Price stability” would be the Fed’s guiding concept, according to incoming Chairman Kevin Warsh during the conference.
The Fed’s hawkish hold might support the dollar and pose a threat to the major pair. A quarter-percentage-point rate increase at the Federal Reserve’s September meeting is now being factored in by futures traders, and there is a chance that action will take place as early as next month’s meeting.