The euro fell in the European market on Monday against a basket of global currencies, resuming its losses that had paused on Friday against the US dollar, and approaching its lowest levels in two months again, as investors focused on buying the US currency as the best alternative investment, amid escalating tensions between the United States and Iran.
In order to reassess the existing probabilities regarding the path of European interest rates, investors are awaiting testimony later today from European Central Bank President Christine Lagarde before the European Parliament in Brussels.
Price overview
Euro exchange rate today: The euro fell against the dollar by 0.15% to ($1.1373), from today’s opening price of ($1.1390), and recorded a high of ($1.1391).
The euro ended Friday's trading session up 0.1% against the dollar, its first gain in the last five days, as it recovered from a two-month low of $1.1359.
The euro lost 0.85% against the dollar last week, its third consecutive weekly loss, due to concerns about the widening interest rate gap between Europe and the United States.
The US dollar index rose nearly 0.2% on Monday, resuming gains that had stalled on Friday, and approaching its highest levels in two months, reflecting the rise in the US currency against a basket of major and minor currencies.
This rise is due to dollar purchases as the best alternative investment, amid growing concerns about escalating political tensions between the United States and Iran, and renewed possibilities of military confrontations between the two sides.
US-Iranian talks
US President Donald Trump rejected an Iranian proposal that included reopening the Strait of Hormuz and resuming nuclear talks, in exchange for lifting the US naval blockade, easing oil sanctions, and restoring a regional ceasefire.
Trump said he expects to hold more talks with Iran this week, while Qatar continues its indirect mediation between Washington and Tehran.
According to reports, there are still significant gaps, particularly regarding Hormuz, the nuclear program, and economic sanctions.
Iranian Foreign Minister Abbas Araqchi confirmed that his country still wants a diplomatic solution, while the Iranian military leadership said that the armed forces are ready for any new American attack.
European interest rate
The money market's pricing of the likelihood of the European Central Bank raising European interest rates by about 25 basis points next October is currently stable below 50%.
In order to reprice those probabilities, investors are awaiting the release of key inflation data in Europe for September this week.
Christine Lagarde
Investors are awaiting the testimony of European Central Bank President Christine Lagarde before the European Parliament's Economic and Monetary Affairs Committee in Brussels, Belgium, later today at 14:30 GMT.
Lagarde is likely to address the latest inflation developments in the Eurozone during her testimony, along with an assessment of the risks of rising price pressures, particularly in light of the fallout from energy shocks and geopolitical developments.
It may provide clear indications of the monetary policy tools appropriate for dealing with these developments, and the extent to which monetary policy needs to be tightened further or kept at its current levels.
