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

• EUR/USD holds firm above 1.1500 as traders assess developments surrounding US-Iran talks.
• Hopes of reopening the Strait of Hormuz send Oil prices to a three-week low.
• US labour-market data remains in focus after weaker-than-expected JOLTS Job Openings.

EUR/USD holds firm above 1.1500 on Tuesday as traders assess the latest developments surrounding US-Iran talks and the possible reopening of the Strait of Hormuz.

US Treasury Secretary Scott Bessent said Washington is in talks with Iran and suggested that an agreement to reopen the Strait could be reached as early as Tuesday or Wednesday.

Separately, Al Arabiya reported, citing a high-ranking source, that an announcement on reopening the key shipping route is expected shortly. The headlines pushed Oil prices sharply lower, with West Texas Intermediate (WTI) falling towards $75.50, its lowest level in three weeks.

Meanwhile, the US Dollar (USD) initially weakened before recovering some ground as the situation remains fluid. US Secretary of State Marco Rubio said progress has been made in discussions with Iran and Oman on allowing more ships to pass through the Strait of Hormuz, but added that no final agreement has been reached.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.90, little changed on the day.

If a peace deal is reached and the Strait of Hormuz fully reopens, Oil prices could fall further, lowering inflation risks and reducing the chances of interest-rate hikes from the Federal Reserve (Fed) and the European Central Bank (ECB) in September.

Attention also remains on US labour-market data. JOLTS Job Openings fell to 7.359 million in June from 7.594 million, below the 7.4 million forecast. Traders now await ADP Employment Change on Wednesday and Nonfarm Payrolls (NFP) on Friday.

Analysts at ING note that their short-term fair value model now shows EUR/USD as “modestly overvalued (around 0.5-1%) at current levels.” While they stress this is “not a very strong directional signal,” it “does endorse” their view that the pair will need “help from a favourable shift in short-term rate differentials (i.e. dovish Fed repricing) to take another leap higher.”

Against that backdrop, ING’s baseline for the coming days is for EUR/USD “to edge back below 1.150 on a more supported USD,” though they add that “unless US jobs figures come in particularly hot, we don’t see a return to 1.140 in the near term.”