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Euro holds near 1.1400 as Iran tensions lift oil prices

EUR/USD stays below 1.1420 as investors weigh risk-off sentiment and look ahead to the ECB policy meeting on Thursday.

Reported · Written up by our desk · Major Pairs

FXStreet said the euro’s modest attempt to rise versus the US dollar faded, with EUR/USD capped below 1.1420 before slipping back to the area a few pips above 1.1400 during the European trading session.

The outlet linked the lack of follow-through to a risk-off mood tied to heightened hostilities involving Iran. It cited reports that the US hit Iranian targets for an 11th consecutive day and that investors are also watching developments in the Red Sea after three Saudi oil tankers reportedly turned around following a Houthi blockade announcement in the Bab el-Mandeb Strait.

Higher crude prices are adding pressure on the euro, FXStreet noted, because the eurozone economy is sensitive to energy costs. It also highlighted that investors are bracing for the European Central Bank’s monetary policy meeting scheduled for Thursday.

FXStreet reported ING’s view that EUR/USD has held up despite the energy rebound, attributing part of the move to interest rate differentials and expectations for more aggressive ECB tightening versus the Federal Reserve. ING also suggested that it may be difficult for markets to price in even higher ECB rates, raising the possibility that ECB support for the euro could wear off.

Latest closeWTI crude $87.52 ▲3.1%|EUR/USD 1.141 ▼0.0%

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