Euro edges higher above 1.1650 on tentative US-Iran ceasefire progress

The EUR/USD pair posts modest gains near 1.1655 during the early Asian session on Friday. The Euro (EUR) strengthens against the US Dollar (USD) after reports that the United States (US) and Iran had ‌reached an agreement to extend a ceasefire. The preliminary readings of Germany’s inflation will be released later on Friday. 

The US and Iran reached a tentative agreement to open the Strait of Hormuz and start nuclear talks, though US President Donald Trump has not signed off on it yet, CNN reported on Thursday. Iranian officials have not yet commented on a potential deal.

Meanwhile, US Vice President JD Vance said that “a couple of language points” are still under discussion, but the sides are making progress in peace talks. Signs of progress in the US-Iran peace deal could provide some support to the riskier assets, such as the shared currency in the near term. 

While the annual US Personal Consumption Expenditures (PCE) Price Index data were in line with forecasts, the soft monthly readings could provide some hope that the burst in prices over the previous month had begun to ease. This report signaled that the US Federal Reserve (Fed) could hold interest ‌rates unchanged for longer.

"The combination of core PCE, which came in a little bit softer, and the growth data also coming in a little softer sends a message that perhaps the Fed can be a little bit less aggressive with its higher-for-longer, which is somewhat risk-supportive," said Joel Kruger, market strategist at London-based LMAX Group.