FX Daily

Markets are reacting to potential de-escalation in US-Iran relations, though ING remains cautious given inflationary pressures and impending FOMC policy developments. The USD is expected to remain resilient.

Key Takeaways

• 1.News of a potential US-Iran peace deal triggered a risk-on market reaction, though historical skepticism regarding such announcements persists.
• 2.The dollar remains supported by the Fed's tightening path despite the geopolitical news and hawkish ECB sentiment.
• 3.The Central Bank of Turkey (CBT) remains in a wait-and-see mode regarding the US-Iran conflict while maintaining its current policy rate of 37%.

Table of Contents

• USD: Peace deal may be close, legacy is a stronger dollar
• EUR: Hawkish ECB fails to lift EUR/USD over 1.16
• TRY: CBT and the market are waiting for the end of the US-Iran conflict
• CEE: Risk-on mood helps the region erase previous losses

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