Euro Slumps as Dollar Strengthens Amid US-Iran Tensions

The euro has slipped to near its two-month low, trading around $1.138 as the US dollar gains strength.

This comes on the heels of fading optimism over progress in US-Iran talks and growing expectations of further Federal Reserve rate hikes this year.

Iran's refusal to soften its conditions for reopening the Strait of Hormuz has added to tensions, with President Trump saying Iran had 'overplayed its hand' and that he expected negotiations to resume this week.

The Fed's hawkish remarks and robust economic growth have reinforced expectations of tighter US monetary policy, with money markets pricing in 100 basis points of interest-rate hikes by the end of 2027.