Euro rebounds above 1.1500 on US‑Iran peace breakthrough, Fed holds rate

The EUR/USD pair recovers some lost ground near 1.1515 during the early Asian trading hours on Thursday. The Euro (EUR) strengthens against the US Dollar (USD) on improved risk sentiment after US President Donald Trump signed the US-Iran MoU to end the war. Traders brace for the US Initial Jobless Claims report, which is due later in the day. 

The BBC reported late Wednesday that the White House stated that Trump and Iran’s Masoud Pezeshkian signed the memorandum of understanding to end the US-Israel war on Iran. The document has been signed electronically by the two leaders after Iranian parliamentary speaker Mohammad Bagher Ghalibaf and US Vice-President JD Vance electronically signed the agreement on Sunday. 

Iran and the US are expected to formally sign an MOU on Friday in Geneva, per Bloomberg. Hopes of a US-Iran peace agreement could boost the riskier assets, such as the shared currency in the near term. 

On Wednesday, the US Federal Reserve (Fed) voted unanimously to hold its benchmark federal funds rate in a range of 3.5% to 3.75% in its first gathering under Kevin Warsh’s leadership. Fed officials signaled the chance of higher rates as they assess the impacts of the Iran war on inflation.

During the press conference, new Chairman Kevin Warsh said that “Price stability” would be the Fed’s guiding principle. Money markets fully priced in a rate hike by October. A hawkish rate hold from the US central bank might lift the Greenback and cap the upside for the major pair.