The US dollar is rising again in the foreign exchange market.
Continued military escalation in the Middle East region
Markets are awaiting new clues about the path of European interest rates.
The euro fell in the European market on Tuesday against a basket of global currencies, resuming its losses that had paused for two days against the US dollar, heading towards its lowest level in four months, as renewed purchases of the US currency as the best alternative investment, amid fading hopes of an end to the Iranian war soon.
The euro is also being negatively pressured by the renewed rise in oil and natural gas prices, which is likely to lead to higher prices and an accelerated pace of inflation in the Eurozone, putting monetary policymakers at the European Central Bank under increasing inflationary pressure.
Price overview
Euro exchange rate today: The euro fell against the dollar by about 0.25% to ($1.1607), from today’s opening price of ($1.1635), and recorded a high of ($1.1646).
The euro ended Monday's trading session up 0.15% against the dollar, its second consecutive daily gain, as it recovered from a four-month low of $1.1507.
US dollar
The dollar index rose by about 0.2% on Tuesday, resuming gains that had paused for two days as part of a correction and profit-taking from a four-month high, reflecting a renewed rise in the US currency against a basket of major and minor currencies.
US President Donald Trump said on Monday that the war would continue until Iran was decisively defeated, and that it might end soon. The Iranian Revolutionary Guard dismissed these remarks as nonsense and vowed to halt oil exports from the Middle East.
Juan Perez, head of trading at Monex US, said: Ultimately, the US dollar is always a good safe-haven option in a turbulent world. It also tends to make gains when the US displays any kind of military power.
Global energy prices
Oil and natural gas prices rose again on Tuesday in global markets, after Iran announced that the oil embargo would continue until US and Israeli attacks on the country cease.
Wells Fargo analysts said in a note: The euro faces a difficult situation. Europe's natural gas storage season is about to begin, and the EU is preparing to start the season with record low gas levels in storage, meaning it will need to buy a large amount of energy now with the potential for prices to rise significantly.
European interest rate
Following higher-than-expected inflation data released last week in Europe, the money market's pricing in the likelihood of the European Central Bank cutting European interest rates by about 25 basis points in March has fallen from 25% to 5%.
In order to reprice the above probabilities, investors are awaiting further economic data from the Eurozone on inflation, unemployment and wage levels.
