Euro Zone: EUR Nears $1.18 on US-Iran Deal Optimism.

The euro climbed toward $1.18, its highest level since April 20, as the US dollar’s safe-haven demand waned amid growing hopes for a US-Iran agreement. Washington proposed a one-page memorandum to Iran, detailing steps to reopen the Strait of Hormuz and lift the US blockade on Iranian ports, with investors awaiting Tehran’s response. Money markets have reduced expectations for European Central Bank rate hikes, now pricing in about 50 basis points of tightening, or two rate hikes, by year-end, with a 75% chance of a first increase in June. ECB board member Piero Cipollone recently stated that the likelihood of a rate hike had risen due to persistent inflation pressures, a view shared by other policymakers earlier this month.