Euro Falls to Late-July Low Amid US-Iran Agreement Uncertainty

The euro has hit its lowest level since late July, as investors' skepticism about the US-Iran agreement remains high. Despite falling oil prices, which typically support the common currency through the terms-of-trade channel, the ECB rate differentials with the Fed are weighing on EUR/USD.

Meanwhile, the Euro Area PMI figures released this morning showed an uptick in activity, with both the services and composite indices exceeding expectations. The key services index jumped to 53.0 in September, its highest level since November, while the composite number rose to 53.1 from 52.0.

Interestingly, these upbeat numbers were largely ignored by currency markets, which may be a sign that they are not yet reflecting in the euro's value. However, it appears there are few signs of the ongoing Iran conflict having any negative impact on activity in the bloc, which could support a gradual move higher in the euro from current levels.