Euro gains as hopes for US-Iran negotiations send oil prices tumbling

Lower oil prices and US Treasury yields weigh on the US Dollar, helping EUR/USD gather pace.
Hopes of reduced Middle East tensions grow as reports point to preliminary progress on a US-Iran diplomatic proposal.
Confidential nuclear inspections and payments tied to frozen Iranian funds are reportedly among the proposal’s provisions.

A sharp reversal in oil prices is pushing the US Dollar (USD) and US Treasury yields lower on Tuesday, allowing EUR/USD to extend its intraday gains during the American session. The move follows reports of progress towards renewed US-Iran negotiations. The pair is trading at around 1.1251 at the time of writing, a rise of 0.35% on the day.

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American approval and preliminary Iranian agreement have been secured for a proposal put to senior Iranian officials by Pakistan’s army chief, 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 go some way towards meeting Iran’s demand for the return of frozen assets.

Citing a Qatari report, Channel 12 added that the proposal includes Tehran’s agreement to a confidential visit to Iranian nuclear facilities by the International Atomic Energy Agency (IAEA). 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 were continuing despite mounting tensions and concerns that fighting could resume. The reports follow those remarks.

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

The prospect of diplomatic headway between the United States and Iran has encouraged some optimism that shipping through the Strait of Hormuz could recover. Conditions remain fragile, however. Houthi attacks on Saudi energy infrastructure, alongside a sharp increase in attacks on vessels transiting the strait, continue to heighten supply risks and sustain inflation concerns.

Euro Gains Most Against the US Dollar Today

Today’s percentage movements in the Euro (EUR) against the major currencies listed are set out below. The Euro’s strongest performance was against the US Dollar.

	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 the 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. Selecting the Euro on the left and following its row across to the US Dollar, for instance, gives the percentage change for EUR (base)/USD (quote) in the corresponding cell.