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Euro holds near 1.1400 as energy shock lifts near term Fed hawkishness

WTI jumped nearly 8% to about $88 a barrel after renewed US-Iran and Red Sea shipping tensions, lifting the odds of a July rate hike to 37% from 23% a day earlier.

Reported · Written up by our desk · Major Pairs

EUR/USD was consolidating near 1.1400 late on Wednesday, up about 0.08%, with the euro failing to capitalize on broad US dollar softness, according to FXStreet.

The outlet tied the currency pressure partly to escalating US-Iran tensions that could support the greenback in the near term. FXStreet noted President Donald Trump warned Iran that any ship attacked would trigger retaliation, while the US continued attacks for a 12th consecutive day, and the UKMTO reported an attack on a tanker in the Red Sea.

Higher energy prices were also a catalyst, with FXStreet saying West Texas Intermediate rose nearly 8% to around $88 per barrel. The jump increases the likelihood the Federal Reserve tightens sooner, with money markets priced at a 63% chance of no rate change at the July 29 meeting, and a 37% chance of a hike, up from 23% a day earlier.

Looking ahead, FXStreet said the ECB is set to release its latest monetary policy decision on Thursday, with expectations that the deposit facility rate will be held at 2.25%, followed by an ECB President Christine Lagarde press conference. It also pointed to a lighter US calendar, including Initial Jobless Claims for the week ending July 18, expected to rise to 212K from 208K, as EUR/USD traded around 1.1408 with a bearish near term bias.

Latest closeEUR/USD 1.141 ▼0.0%

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