The euro rose toward 1.1200 on Monday, trading around 1.1203 and gaining 0.55% as the US dollar weakened as oil prices fell and the United States and Iran continued diplomatic talks.
- The EUR/USD pair traded near 1.1203, up 0.55% on the day as the US dollar index slipped to 101.85.
- West Texas Intermediate crude oil declined over 3% to $86.85 per barrel following diplomatic developments.
- Traders priced in an 80% probability of a Federal Reserve rate hike in December after October nonfarm payrolls hit 165,000.
The currency movement coincided with a drop in West Texas Intermediate (WTI) crude, which traded around $86.85 per barrel, down more than 3% on the day, according to market data. US President Donald Trump minimized the probability of new strikes against Iran while diplomatic efforts continued.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani visited Washington, D.C., to hold discussions with President Trump and Vice President JD Vance regarding an end to the conflict.
A diplomatic breakthrough remains uncertain as Tehran ties progress to the lifting of the US naval blockade, the return of seized assets, and the removal of sanctions.
Without an agreement, lower oil prices could struggle to persist, keeping inflation risks in focus on both sides of the Atlantic. In October, euro area headline inflation rose to 4.0% year-on-year from 3.8% in September, driven largely by energy costs, while core inflation held steady at 2.5%.
In the United States, economic growth resilience and labor market strength provide the Federal Reserve room for additional rate hikes to guide inflation back to the 2% target. October nonfarm payrolls (NFP) reached 165,000, more than double the 65,000 expected, while the unemployment rate ticked down to 4.1%. CME FedWatch data indicated traders are pricing in an approximate 80% probability of a December rate increase.
Meanwhile, euro area markets anticipated a December rate hike from the European Central Bank. The ECB kept its deposit facility rate at 2.50% in October following 50 basis points of total hikes earlier in the year. Officials maintain a cautious stance on further tightening, balancing higher inflation risks against potential economic growth softening.
The US dollar index (DXY), tracking the greenback against a basket of six major currencies, hovered near 101.85, down 0.44% on the day. Foreign exchange performance varied across major pairs, with the dollar registering its strongest move against the Swiss franc.
| Currency | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | – | -0.55 % | -0.49 % | -0.32 % | 0.00 % | -0.64 % | -1.32 % | 0.10 % |
| EUR | 0.55 % | – | 0.06 % | 0.27 % | 0.55 % | -0.09 % | -0.77 % | 0.65 % |
| GBP | 0.49 % | -0.06 % | – | 0.21 % | 0.48 % | -0.17 % | -0.83 % | 0.58 % |
| JPY | 0.32 % | -0.27 % | -0.21 % | – | 0.29 % | -0.35 % | -1.02 % | 0.39 % |
| CAD | 0.00 % | -0.55 % | -0.48 % | -0.29 % | – | -0.65 % | -1.30 % | 0.10 % |
| AUD | 0.64 % | 0.09 % | 0.17 % | 0.35 % | 0.65 % | – | -0.67 % | 0.75 % |
| NZD | 1.32 % | 0.77 % | 0.83 % | 1.02 % | 1.30 % | 0.67 % | – | 1.43 % |
| CHF | -0.10 % | -0.65 % | -0.58 % | -0.39 % | -0.10 % | -0.75 % | -1.43 % | – |
Upcoming US inflation data releases are positioned to influence rate expectations and dictate the dollar’s trajectory. The Consumer Price Index (CPI) report is scheduled for Tuesday, followed by the Producer Price Index (PPI) on Friday.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
