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The euro remained above $1.155, close to a three-week high, as investors weighed mixed signals from the US and Iran over the prospects for reopening the Strait of Hormuz. Iran’s Foreign Minister said an agreement with Oman to establish a shipping route through the strait was “very close,” but cautioned that it would not immediately restore shipping flows. Meanwhile, the Euro Area outlook has improved, with recent economic resilience prompting analysts to become more optimistic about growth. Second estimates later this week are expected to confirm the Eurozone economy expanded by 0.4% in Q2, the most since early 2025. Looking ahead, growth is projected to moderate in the near term before gradually gaining momentum. On the monetary policy front, the European Central Bank left interest rates unchanged in July following a 25bps increase in June, its first hike in three years, while expectations of a near-term Federal Reserve rate hike eased following weaker-than-expected employment data.

The euro strengthened above $1.157, reaching its highest level since June 16, as the dollar weakened sharply following a disappointing US jobs report that reduced expectations of further Federal Reserve rate hikes. Meanwhile, easing oil prices reinforced expectations that inflationary pressures in the Euro Area will continue to moderate. Investors also monitored developments surrounding the Strait of Hormuz, with President Donald Trump saying negotiations between Iran and Oman were “moving along,” although no agreement has yet been finalized. A deal on managing the strategic waterway is seen as crucial to restoring energy flows, which have remained below pre-war levels amid continued regional tensions. A reopening could also help pave the way for broader negotiations aimed at ending the conflict. Against this backdrop, the European Central Bank left interest rates unchanged in July after raising its key rate by 25 basis points in June, its first increase in three years.

The euro traded around $1.152 on Friday, slightly below Wednesday’s seven-week high of $1.155, as investors assessed the outlook for energy prices and monetary policy. Oil prices remained lower for the week but extended their gains over the past two sessions, with renewed supply concerns raising fears that higher energy costs could keep inflation elevated. Iran and Oman are reportedly working on an agreement to establish transit routes through the Strait of Hormuz, although no deal has yet been announced. Concerns intensified after Iran published a restrictive draft plan that could limit access for US and Israeli vessels and require compensation from countries it considers hostile. Still, investors remain hopeful that a deal to reopen the waterway would eventually lower oil prices and ease inflationary pressures. Meanwhile, the ECB left rates unchanged in July following a 25-basis-point hike in June, its first increase in three years, amid renewed energy-driven inflation pressures.