US-Iran negotiation hopes lift euro as oil prices slide

Lower Oil prices and US Treasury yields put pressure on the US Dollar, supporting further gains in EUR/USD.
Hopes of reduced Middle East tensions grow after reports of initial progress on a US-Iran diplomatic proposal.
Confidential nuclear inspections and payments tied to frozen Iranian funds are reportedly part of the proposal.

EUR/USD trades around 1.1251 at the time of writing. The pair is up 0.35% on the day, extending its intraday gains in Tuesday’s American session. Reports of progress towards renewed US-Iran talks have triggered a sharp reversal in Oil prices, driving the US Dollar (USD) and US Treasury yields lower.

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A proposal put to senior Iranian officials by Pakistan’s army chief has secured American approval and Iran’s preliminary agreement, according to Israel’s Channel 12 News. Under the reported plan, interest earned on $6 billion of Iranian funds frozen in Qatari banks would be transferred to Tehran. This would partly meet Iran’s demand for the return of frozen assets.

Citing a Qatari report, Channel 12 added that Tehran has accepted a confidential visit to Iranian nuclear facilities by the International Atomic Energy Agency (IAEA) under the proposal. No public announcement of the visit would be made.

Earlier, Qatar’s Foreign Ministry spokesperson Majed al-Ansari said talks between Iran and the United States remain under way despite mounting tensions and concerns that fighting could resume. The reports came after his comments.

West Texas Intermediate (WTI) Oil has pulled back to around $95.65 following the reports, having briefly exceeded $100 earlier in the day. At around 101.55, the US Dollar Index (DXY) is at its lowest since 1 October. The index, which measures the Greenback against a basket of six major currencies, has extended its retreat from last week’s 18-month high near 103. The benchmark 10-year US Treasury yield is near 5.08%, a decline of 6 basis points on the day.

Prospects for diplomatic progress between the United States and Iran have raised some hopes that shipping through the Strait of Hormuz could recover. Conditions remain fragile, however. Houthi attacks on Saudi energy infrastructure, alongside a steep increase in attacks on vessels transiting the strait, continue to heighten supply risks and sustain inflation concerns.

Euro Exchange Rates Today

Against the major currencies listed below, the Euro (EUR) recorded its strongest performance against the US Dollar today. The table sets out the day’s percentage changes.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.29%	-0.61%	-0.32%	-0.44%	-0.44%	-0.43%	-0.17%
EUR	0.29%		-0.34%	-0.02%	-0.15%	-0.14%	-0.14%	0.12%
GBP	0.61%	0.34%		0.34%	0.22%	0.22%	0.20%	0.45%
JPY	0.32%	0.02%	-0.34%		-0.14%	-0.11%	-0.14%	0.14%
CAD	0.44%	0.15%	-0.22%	0.14%		0.02%	0.01%	0.27%
AUD	0.44%	0.14%	-0.22%	0.11%	-0.02%		-0.00%	0.26%
NZD	0.43%	0.14%	-0.20%	0.14%	-0.01%	0.00%		0.27%
CHF	0.17%	-0.12%	-0.45%	-0.14%	-0.27%	-0.26%	-0.27%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For example, choosing the Euro on the left and reading across to the US Dollar gives the percentage change for EUR (base)/USD (quote) in the corresponding cell.