Euro holds above 1.1500 on Hormuz reopening hopes and softer US jobs data

The euro maintained its position above 1.1500 on Tuesday as traders monitored updates regarding negotiations between the US and Iran, as well as the potential reopening of the Strait of Hormuz. US Treasury Secretary Scott Bessent confirmed ongoing discussions with Iran, expressing optimism about a possible agreement to resume shipping through the key waterway by Tuesday or Wednesday.

Reports from Al Arabiya suggested that an announcement regarding the reopening could be made soon. This news had a significant impact on oil prices, which plummeted as West Texas Intermediate (WTI) approached $75.50, its lowest level in three weeks. The US Dollar (USD) initially weakened but later regained some strength amid the ongoing uncertainty.

US Secretary of State Marco Rubio announced some progress in talks with Iran and Oman regarding the Strait of Hormuz, but emphasized that a final agreement had not yet been reached. The US Dollar Index (DXY), which measures the greenback's value against six major currencies, traded near 99.90, showing minimal change for the day.

Traders are closely watching US labor market data, with JOLTS Job Openings decreasing to 7.359 million in June, below the anticipated 7.4 million. Analysts at ING believe that their short-term fair value model now suggests EUR/USD is modestly overvalued by 0.5-1%. However, they caution that this signal is not particularly strong and only supports their view that the pair may benefit from a shift in short-term rate differentials, such as a dovish Federal Reserve (Fed) stance, to climb further.

ING's baseline expectation is for EUR/USD to dip below 1.1500 on a stronger USD, unless US jobs data surprises on the positive side.