Euro continues to climb as the market senses an end to the Iran war

The euro is one of the most-straightforward Iran war trades, albeit not one with the highest torque.

The reasoning is simple: Much of the oil and the refined products shipped through the Strait of Hormuz ends up in Europe, fuelling autos and airplanes. The cut off of those supplies endangers the European economy more than than it does the US economy, and as a result we've seen the euro under performer since the war began.

But if we look at the chart now, we can see the steady turn and now the euro is back to where it was during the opening shots of the conflict.

The euro may also be getting a lift today from the election in Hungary, which saw Orban removed from power in a move that should increase European harmony on several issues. At the same time, the euro is rising in step with the pound and still trails the commodity currencies and Swiss franc so I'd be hesitant to put much weight on Hungary.

The main message fro mall markets today is that the war is closer to a conclusion, despite the grandstanding from JD Vance. Trump's comments today sounded positive and he said he got a good phone call from Tehran today. The market was leaning into the TACO before Trump even spoke as the ceasefire held.

In the past few minutes, the moves in the euro and risk assets have accelerated but there's no clear catalyst. Instead, the market appears to be increasingly comforatble with the state of play in Iran. The US appears to be focused on nuclear and Iran said it was 'inches' away from a deal before Vance abruptly left. The contours of any agreement appear to be removing Iran's uranium in exchange for sanctions relief and funds. It's not clear how control of Hormuz will function but it's safe to assume that the oil will flow, with a toll or not.