The euro fell in the European market on Thursday against a basket of global currencies, giving up its highest level in a week against the US dollar, on its way to suffering its first loss in the last three days, as investors shied away from risk and focused on buying the US currency as the best alternative investment, following US President Donald Trump’s speech on developments in the Iranian war.

With inflation in the Eurozone exceeding the European Central Bank’s medium-term target due to rising energy prices, the likelihood of European interest rates being raised at least once this year has increased, pending the release of more crucial economic data in Europe.

Price overview

Euro exchange rate today: The euro fell against the dollar by about 0.5% to ($1.1532), from today’s opening price of ($1.1588), and recorded a high of ($1.1605).

The euro ended Wednesday's trading session up 0.3% against the dollar, its second consecutive daily gain, and hit a one-week high of $1.1627, amid growing hopes that the Iranian war is nearing its end.

US dollar

The dollar index rose 0.5% on Thursday, resuming gains that had paused for two sessions, reflecting a renewed rise in the US currency against a basket of global currencies.

Dollar purchases as the best alternative investment have resumed following US President Donald Trump's address to the nation regarding developments in the Iranian war.

Trump's speech

Trump focused on several crucial points regarding the course of the Iranian war, the most prominent of which were:

The objectives of the war with Iran are nearing completion, and Tehran no longer poses a real threat.

Energy and oil infrastructure may be bombed if negotiations are not satisfactory.

Major military operations will only last for a period of two to three weeks.

We don't need Middle Eastern oil, and US oil production will soon rise significantly.

The United States has abundant quantities of gas.

We do not need the Strait of Hormuz, and when the conflict ends, the strait will open automatically.

Countries affected by the closure of the Strait of Hormuz must take action to protect their interests.

Opinions and analyses

Carol Kong, a currency strategist at Commonwealth Bank of Australia, said: Trump's comments have not reassured the markets... the markets are beginning to realize that the war will likely escalate before it calms down.

Kong added: The dollar is certain to rise further against all major currencies, especially as markets realize that the global economy will experience a significant slowdown.

European interest rate

European Central Bank President Lagarde said last week that the bank is prepared to raise interest rates even if the expected rise in inflation is short-term.

Data released on Tuesday showed that inflation in the eurozone exceeded the European Central Bank's target of 2.5% in March, driven by rising energy prices.

Following that data, the money market's pricing of the likelihood of the European Central Bank raising European interest rates by about 25 basis points this April rose from 30% to 35%.

Sources told Reuters that the European Central Bank is likely to begin discussing raising interest rates during its meeting this month.

In order to reprice the above probabilities, investors are awaiting further economic data from the Eurozone on inflation, unemployment and wage levels.