The currency remains under pressure following reports that the United States and Iran have reached a temporary ceasefire agreement, significantly easing tensions in the Middle East and reducing the risk of a global economic slowdown. The parties now have two weeks to finalize the terms of a broader settlement. However, experts remain cautious, noting that it is still unclear whether this marks the beginning of a lasting peace or simply a pause before a new round of conflict.
It is evident that contradictions may arise during negotiations, as some of Iran’s demands - such as the withdrawal of US forces from the region and the payment of reparations - are unlikely to be accepted by Washington. US President Donald Trump previously expressed optimism, stating on Truth Social that he had received a ten-point proposal and considered it “a solid basis for negotiations,” adding that “most of the previously disputed issues have been resolved.”
Another concern for the global economy remains the transit of goods and oil through the Strait of Hormuz. While passage may remain open during negotiations, Iran is expected to impose duties on shipping in the future, potentially generating $64.0 billion annually and keeping transportation costs elevated. As a result, oil prices are unlikely to return to pre-crisis levels.
Recent comments from Federal Reserve officials also remain in focus. New York Fed President John Williams stated that the “energy shock” could push inflation to around 2.75% this year, suggesting that interest rates should remain unchanged for now. Fed Vice Chair Philip Jefferson expressed a similar view, highlighting concerns about rising consumer prices. Although these comments were made before the ceasefire announcement, the truce is unlikely to prompt an immediate shift in the Fed’s cautious stance.
Eurozone
The euro is strengthening against the US dollar but weakening against the pound and showing mixed performance against the yen.
February data on producer prices and retail sales in the eurozone came in generally weak. Producer prices declined from 0.8% to -0.7% month-over-month and from -2.0% to -3.0% year-over-year. Retail sales fell by 0.2% monthly and slowed from 2.1% to 1.7% annually, slightly below expectations of 1.6%.
Declining new orders and weaker demand are pressuring European manufacturers, forcing them to adjust pricing strategies. This trend is confirmed by German factory orders, which rose only 0.9%, missing forecasts of 3.0%. Analysts note that the full impact of the Middle East conflict on German industry remains unclear but expect increased government spending on infrastructure to offset potential losses.
United Kingdom
The pound is strengthening against the euro, yen, and US dollar.
March housing price data from Halifax Bank plc showed a sharper-than-expected decline. Prices fell by -0.5% month-over-month compared to a forecast of 0.2%, while annual growth slowed from 1.2% to 0.8% against expectations of 1.5%.
The decline is attributed to economic uncertainty related to geopolitical tensions, which has reduced demand for high-value purchases. Halifax also noted that rising energy cost concerns have increased inflation expectations, affecting confidence in potential interest rate adjustments this year.
Japan
The yen is strengthening against the US dollar but weakening against the pound and showing mixed performance against the euro.
Investors are analyzing data showing that total labor income and average wages rose by 3.3%, exceeding the forecast of 2.7% and remaining above the Bank of Japan’s 2.0% target. This could support further inflation growth and potential monetary tightening.
Additionally, Japan’s current account balance rose to 3.933 trillion yen (unadjusted) and 2.710 trillion yen (seasonally adjusted), reflecting stronger external trade conditions.
Australia
The Australian dollar is gaining against the yen, pound, and US dollar but shows mixed dynamics against the euro.
In the absence of major economic releases, price movements are driven by external factors. Authorities in Queensland have announced plans to push the federal government to simplify environmental approval processes to accelerate new oil field development.
Faster regulatory procedures could support energy security, which has been highlighted as a vulnerability during the recent Middle East conflict.
Oil
Oil prices are showing a sharp decline following the announcement of a two-week ceasefire between the United States and Iran.
The agreement includes at least partial reopening of the Strait of Hormuz, although it is expected to remain under the control of the Islamic Revolutionary Guard Corps (IRGC), which plans to impose transit fees. According to vessel tracking firm Kpler, about 187 tankers carrying 172.0 million barrels of crude oil and petroleum products were waiting off the coast of Iran for clearance to proceed.
Additional pressure comes from data by the American Petroleum Institute (API), which reported a rise in crude inventories by 3.719 million barrels. Investors are now awaiting official data from the US Energy Information Administration (EIA), with forecasts suggesting a potential draw of 1.0 million barrels, which could act as a catalyst for a short-term recovery in oil prices.
