EUR/USD Holds Firm Amid Hormuz Tensions, Eyes Jobs Data
The EUR/USD currency pair held steady above 1.1500 on Tuesday as markets reacted to news of US-Iran discussions and the potential reopening of the Strait of Hormuz.
US Treasury Secretary Scott Bessent stated that Washington is talking with Iran, suggesting a deal could be reached soon, possibly by Tuesday or Wednesday. This led to speculation about the impact on oil prices, which fell towards $75.50, a three-week low, causing the US Dollar to dip before recovering some ground.
The prospect of a full reopening could put additional downward pressure on oil prices, potentially easing inflation risks and reducing the likelihood of rate hikes by the Federal Reserve and European Central Bank in September.
Market attention now shifts to upcoming US jobs data, with traders watching Wednesday's ADP Employment Change and Friday's Nonfarm Payrolls for clues. ING's short-term fair value model suggests EUR/USD is overvalued by 0.5-1%, predicting a potential drop below 1.150 on a stronger USD.