EUR/USD edges higher as Iran reopens Strait of Hormuz, Oil tumbles

• EUR/USD edges higher as broad US Dollar weakness keeps the pair on track for a third straight weekly gain.
• De-escalation hopes between the US and Iran weigh on the Greenback as Iran reopens the Strait of Hormuz.
• Oil prices tumble nearly 10%, easing global inflation concerns.

The Euro (EUR) edges higher against the US Dollar (USD) on Friday as the Greenback comes under heavy selling pressure after Iran’s decision to reopen the Strait of Hormuz improved overall market sentiment and raised hopes for a potential US-Iran peace agreement.

At the time of writing, EUR/USD is trading around 1.1814 after hitting an intraday high of 1.1849, remaining on track for a third straight weekly gain.

Iran’s Foreign Minister Abbas Araghchi said on Friday that the Strait of Hormuz has been declared “completely open” for all commercial vessels for the duration of the ceasefire, in line with the truce in Lebanon. However, the reopening appears to be only partial, with commercial vessels allowed to pass through designated routes and subject to approval from the Iranian Revolutionary Guards Navy.

The move signals a notable de-escalation in tensions and could pave the way for further diplomatic progress between the US and Iran. Although uncertainty persists after US President Donald Trump said the naval blockade will remain “in full force and effect” against Iran until a final agreement is fully completed. He also said Iran is working with the United States to remove sea mines, helping restore safe passage.

In reaction, the US Dollar extended its decline, with the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major peers, trading near 97.74, its lowest level since February 27 and poised for a third consecutive weekly drop.

Crude prices also retreated sharply, with West Texas Intermediate (WTI) falling to its lowest level since March 10. At the time of writing, WTI is trading around $80.00, down nearly 10% on the day.

The pullback in Oil prices is easing immediate inflation risks, reducing pressure on central banks to tighten monetary policy. Markets are now pricing in roughly a 50% chance that the Federal Reserve (Fed) will deliver a 25 basis point rate cut by year-end, while European Central Bank (ECB) tightening bets are being pared back.

Looking ahead, market attention will turn to a possible second round of US-Iran talks scheduled for the weekend. Trump said he would consider extending the current ceasefire if both sides are close to reaching an agreement, adding that “they’ve agreed to almost everything,” including handing over what he described as “nuclear dust,” though this has not been confirmed by Iran.

Investors remain cautiously optimistic that a deal could be reached, raising expectations that the conflict may be nearing an end, although differences over nuclear issues are likely to keep uncertainty elevated and markets sensitive to incoming headlines.