Euro faces selling pressure on renewed US-Iran tensions
- EUR/USD trades lower to near 1.1618 as oil prices rise due to renewed US-Iran tensions.
- Higher oil prices have strengthened the US Dollar.
- Eurozoneโs core HICP arrives higher at 2.5% YoY in May from 2.4% estimates.
The Euro (EUR) is down against its major currency peers, trading 0.1% lower to near 1.1618 during the European trading session on Wednesday. The major currency faces selling pressure as rising oil prices due to renewed United States (US)-Iran tensions have diminished the appeal of currencies from oil-importing economies.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.03% | -0.16% | 0.06% | 0.18% | 0.31% | 0.16% | |
| EUR | -0.09% | -0.05% | -0.24% | -0.03% | 0.09% | 0.21% | 0.08% | |
| GBP | -0.03% | 0.05% | -0.19% | 0.02% | 0.15% | 0.26% | 0.14% | |
| JPY | 0.16% | 0.24% | 0.19% | 0.21% | 0.33% | 0.43% | 0.32% | |
| CAD | -0.06% | 0.03% | -0.02% | -0.21% | 0.13% | 0.25% | 0.11% | |
| AUD | -0.18% | -0.09% | -0.15% | -0.33% | -0.13% | 0.12% | -0.04% | |
| NZD | -0.31% | -0.21% | -0.26% | -0.43% | -0.25% | -0.12% | -0.13% | |
| CHF | -0.16% | -0.08% | -0.14% | -0.32% | -0.11% | 0.04% | 0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
In the European trade, the WTI Oil price extends its upside for the third straight trading day on Wednesday, rising 2.3% to near $93.80.
On Tuesday, the US Central Command (CENTCOM) reported that it had intercepted and defeated a series of Iranian missile and drone attacks and carried out self-defense strikes on Iranโs Qeshm Island in the Strait of Hormuz.
Surging oil prices have strengthened the US Dollar (USD). As of writing, the US Dollar Index (DXY), which tracks the Greenbackโs value against six major currencies, trades 0.12% higher to near 99.35.
On the domestic front, faster-than-expected growth in the Eurozone core Harmonized Index of Consumer Prices (HICP) data โ which excludes volatile components like food, energy, alcohol, and tobacco โ for May has prompted hawkish European Central Bank (ECB) bets. The core HICP arrived at 2.5% Year-on-Year (YoY), higher than 2.4% estimates and the previous reading of 2.2%.
Earlier in the day, ECB policymaker and the head of Belgium's central bank, Pierre Wunsch, said that the case for raising interest rates wonโt be derailed even if a peace deal between the US and Iran is finalized before next week's policy meeting.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms โrisk-onโ and โrisk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a โrisk-onโ market, investors are optimistic about the future and more willing to buy risky assets. In a โrisk-offโ market investors start to โplay it safeโ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of โrisk-onโ, stock markets will rise, most commodities โ except Gold โ will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a โrisk-offโ market, Bonds go up โ especially major government Bonds โ Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are โrisk-onโ. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of โrisk-offโ are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the worldโs reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them โ even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
