Euro Hovers Near Two-Week Low as Hormuz Tensions Weigh

The euro held steady at $1.17 against the dollar, its weakest level in two weeks, as tensions in the Strait of Hormuz persisted and diplomatic efforts stalled. With no new peace talks scheduled, the US and Iran remain at odds over control of the critical waterway. President Trump extended the April 7 truce indefinitely, pending a new Iranian proposal, but Tehran has ruled out immediate negotiations, pushing Brent crude above $103 per barrel and deepening economic uncertainty. New data showed the Eurozone’s private sector contracted in April at the fastest pace since November 2024, as the Iran war drove up energy costs, hurting consumer demand and the services sector. Meanwhile, Germany’s Economics Ministry halved its 2026 growth forecast, blaming the energy shock from the Middle East conflict.

The euro stabilized at $1.17 against the US dollar, its weakest point in two weeks, as tensions flared again in the Strait of Hormuz and diplomatic progress remained elusive. With no new peace talks in sight, both the US and Iran stay deadlocked over control of the strategic waterway. President Trump has extended the April 7 truce indefinitely, awaiting a fresh proposal from Iran, but Tehran has dismissed the prospect of immediate negotiations. The standoff has driven Brent crude above $103 per barrel, adding to economic uncertainty. On the data front, today’s releases will include updated private sector activity reports for Germany, France, and the broader Eurozone. Yesterday, Germany’s Economics Ministry slashed its 2026 growth forecast by half, citing the severe energy shock stemming from the Middle East conflict.

The euro climbed to $1.175 as cautious optimism grew over a potential Middle East resolution following the extension of the ceasefire. US President Trump indefinitely prolonged the ceasefire with Iran, despite stalled talks and the ongoing US naval blockade in the Strait of Hormuz. He acknowledged Pakistan’s call for restraint as mediator but insisted the blockade would remain unless Iran concedes. Iran’s Tasnim news agency, however, reported signs of possible US flexibility on the issue. Meanwhile, expectations for European Central Bank rate hikes have been slightly scaled back, though two increases are still anticipated this year. The shift reflects easing pressure from lower oil prices and the uncertain but extended US-Iran ceasefire.