The euro fell below 1.17, and an ECB rate hike seems imminent.
2026-05-13 17:43:12
The euro weakened against a basket of global currencies during European trading hours on Wednesday (May 13), marking its third consecutive day of decline against the dollar. The euro was pressured by heightened risk aversion among investors as peace talks between the US and Iran stalled, leading to continued buying of the dollar as a safe-haven asset. This week, market bets on a June rate hike by the European Central Bank have increased, with investors awaiting further Eurozone economic data to reassess this expectation.
The euro is currently down 0.35% against the dollar, trading at 1.1697, after hitting a high of 1.1741 during the session. The euro had already fallen about 0.4% against the dollar on Tuesday, marking its second consecutive day of losses, mainly due to fading hopes for peace in the Middle East.
As of press time, the US dollar index rose 0.25%, marking its third consecutive trading day of gains, reflecting the continued strength of the dollar against a basket of global currencies. The dollar's rise is attributed to investors continuing to allocate their assets to the dollar as a safe-haven asset after key US inflation data reinforced market expectations of a potential Federal Reserve rate hike this year.
Hopes for a Middle East peace agreement are fading. After Iran rejected a U.S. proposal to end the war and insisted on a series of key demands, Trump said a ceasefire agreement with Iran was "on the verge of collapse." On Tuesday, Trump stated that the economic difficulties facing the American people would not affect his determination to negotiate an end to the war with Iran, and emphasized that preventing Iran from acquiring nuclear weapons remains his top priority. Trump also confirmed that he is seriously considering restarting the "Freedom Project" and announced plans to meet with a group of senior generals and military leaders to discuss alternative options and strategies regarding Iran. Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that there is no choice but to accept Iran's proposals and stressed that Tehran is prepared to respond immediately to any military action.
This week, as global oil prices rose, the money market raised its pricing for a 25-basis-point rate hike by the European Central Bank in June from 45% to 50%. Bundesbank President Joachim Nagel has made it clear that unless there is a fundamental change in the inflation outlook, the likelihood of a rate hike is increasing.
Overall, the deteriorating prospects of US-Iran negotiations are the core variable in current market sentiment. With the ceasefire agreement on the verge of collapse, Iran's hardline stance, and Trump preparing military options, safe-haven demand continues to support the US dollar, while the euro is under downward pressure. Although market expectations for a June rate hike by the European Central Bank have increased, the euro's upside potential is likely to be limited in a market environment dominated by risk aversion. In the coming days, further developments in the US-Iran situation and key Eurozone economic data will be crucial factors in determining whether the euro can stop its decline.
Looking at the daily chart for the euro against the US dollar, the current price is trading around 1.1697. The moving averages are showing a high degree of convergence.
Specifically, the four moving averages—MA20 (1.1730), MA50 (1.1645), MA100 (1.1708), and MA200 (1.1681)—are densely distributed within a narrow range of 1.1645-1.1730, with a spacing of less than 85 basis points. The current price of 1.1697 presents a delicate pattern of being "sandwiched between the moving averages." Specifically, the price has broken below MA20 (1.1730) and MA100 (1.1708), but remains above MA200 (1.1681) and MA50 (1.1645). This is a typical mixed structure of "short-term bearish, long-term support"—near-term resistance is in the 1.1708-1.1730 area, while the lower support level is around 1.1681-1.1645. The price is stuck in a gap of less than 20 basis points between the MA100 and MA200, where the bulls and bears have formed a brief balance.
(Euro/USD daily chart, source: FX678)
At 17:24 Beijing time on May 13, the euro was trading at 1.1697/98 against the US dollar.
Euro exchange rate trend
The euro is currently down 0.35% against the dollar, trading at 1.1697, after hitting a high of 1.1741 during the session. The euro had already fallen about 0.4% against the dollar on Tuesday, marking its second consecutive day of losses, mainly due to fading hopes for peace in the Middle East.
The US dollar index strengthened.
As of press time, the US dollar index rose 0.25%, marking its third consecutive trading day of gains, reflecting the continued strength of the dollar against a basket of global currencies. The dollar's rise is attributed to investors continuing to allocate their assets to the dollar as a safe-haven asset after key US inflation data reinforced market expectations of a potential Federal Reserve rate hike this year.
The prospects for US-Iran negotiations deteriorate
Hopes for a Middle East peace agreement are fading. After Iran rejected a U.S. proposal to end the war and insisted on a series of key demands, Trump said a ceasefire agreement with Iran was "on the verge of collapse." On Tuesday, Trump stated that the economic difficulties facing the American people would not affect his determination to negotiate an end to the war with Iran, and emphasized that preventing Iran from acquiring nuclear weapons remains his top priority. Trump also confirmed that he is seriously considering restarting the "Freedom Project" and announced plans to meet with a group of senior generals and military leaders to discuss alternative options and strategies regarding Iran. Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that there is no choice but to accept Iran's proposals and stressed that Tehran is prepared to respond immediately to any military action.
European interest rate expectations
This week, as global oil prices rose, the money market raised its pricing for a 25-basis-point rate hike by the European Central Bank in June from 45% to 50%. Bundesbank President Joachim Nagel has made it clear that unless there is a fundamental change in the inflation outlook, the likelihood of a rate hike is increasing.
Risk aversion dominates market sentiment, and the euro still faces pressure in the short term.
Overall, the deteriorating prospects of US-Iran negotiations are the core variable in current market sentiment. With the ceasefire agreement on the verge of collapse, Iran's hardline stance, and Trump preparing military options, safe-haven demand continues to support the US dollar, while the euro is under downward pressure. Although market expectations for a June rate hike by the European Central Bank have increased, the euro's upside potential is likely to be limited in a market environment dominated by risk aversion. In the coming days, further developments in the US-Iran situation and key Eurozone economic data will be crucial factors in determining whether the euro can stop its decline.
Euro nearing a turning point
Looking at the daily chart for the euro against the US dollar, the current price is trading around 1.1697. The moving averages are showing a high degree of convergence.
Specifically, the four moving averages—MA20 (1.1730), MA50 (1.1645), MA100 (1.1708), and MA200 (1.1681)—are densely distributed within a narrow range of 1.1645-1.1730, with a spacing of less than 85 basis points. The current price of 1.1697 presents a delicate pattern of being "sandwiched between the moving averages." Specifically, the price has broken below MA20 (1.1730) and MA100 (1.1708), but remains above MA200 (1.1681) and MA50 (1.1645). This is a typical mixed structure of "short-term bearish, long-term support"—near-term resistance is in the 1.1708-1.1730 area, while the lower support level is around 1.1681-1.1645. The price is stuck in a gap of less than 20 basis points between the MA100 and MA200, where the bulls and bears have formed a brief balance.
(Euro/USD daily chart, source: FX678)
At 17:24 Beijing time on May 13, the euro was trading at 1.1697/98 against the US dollar.
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