05.08.202609:12:14UTC+00Euro Climbs to Near Seven-Week High on Easing Geopolitical Tensions

The euro climbed toward $1.155, its strongest level since June 16, as improving risk sentiment boosted demand for the single currency amid rising optimism that the US and Iran may reach an agreement to end their five-month conflict and reopen the Strait of Hormuz. Crude oil prices have declined about 10% this week after US President Donald Trump said the two countries were engaged in "very good discussions," fueling hopes of a recovery in Middle Eastern energy supplies. The drop in energy prices has eased fears of higher inflation and slowing economic growth, bolstering expectations that the European Central Bank will normalize policy only gradually. Markets now fully price in just one additional ECB rate increase by year-end, with roughly a 40% probability of a second. The ECB raised interest rates in June but kept policy unchanged at its most recent meeting.