No breakthrough on the USA-Iran line
Representatives of the United States and Iran concluded another round of negotiations that took place in Qatar.
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The agency Reuters, citing anonymous sources familiar with the matter, reported that negotiators from both countries spent two days in Doha, discussing maritime security in the Strait of Hormuz and the unlocking of Iranian financial assets.
As the spokesperson for the Qatari Ministry of Foreign Affairs, Majed al-Ansari, said, the next meeting will take place after the funeral ceremonies for the late supreme leader of Iran, Alejandro Chameneigo, scheduled for July 9.
Donald Trump confirmed that the talks so far are making progress on potential restrictions on Iran's nuclear program.
“Iran's denuclearization is proceeding successfully. Very successful meetings took place, we will see what comes out of it,” he told reporters.
Information provided by Reuters sources indicates that the issue of Iran's nuclear program was not one of the main topics in Doha.
“Of course we are concerned about the nuclear issue and intend to start talks on it,” the U.S. Vice President, J.D Vance said.
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“Negotiations have clearly stalled,” the expert notes. Will the dollar benefit, will the euro suffer?”
Adam Fuchs, analyst and currency dealer for Walutomat.pl, in an interview with FXMAG, said that information coming from Qatar is key to clarifying tensions in financial markets.
“You can at least accept that talks are ongoing, if that is still the best description of what is happening around Qatar and the indirect contacts between the parties. Negotiations have clearly stalled, but sooner or later another round will take place,” he said.
“On one hand, the suspension of hostilities is regularly supplemented by exchanges of fire or incidents around Hormuz. On the other hand, these events are increasingly less impactful on markets,” he added.
It is clearly visible on FX, but even more so on oil, which after an earlier shock has returned to pre-war levels and does not react as nervously as at the beginning of the conflict. It is increasingly hard to disagree with the thesis that further tensions in the Persian Gulf are today more negotiating arguments for the market than a real start of a new war phase.
The only thing that remains debatable is whether investors have already discounted the scenario of lasting peace too early. At the moment it seems that markets prefer to believe in a slow closing of the agreement rather than a return to full escalation.
The expert also explained how the above events affect dollar quotes.
“Traditionally, the beginning of the month for the dollar already means impulses from the U.S. labor market. One could even put forward the thesis that they are gaining even more importance, since the new Fed chair is not a fan of overly exuberant central bank communication. Kevin Warsh clearly signals that investors should focus more on macro data than on ready hints from the Fed,” he said.
“If the U.S. labor market shows its strength again, and I take that scenario as the baseline, the option of further hawkish Fed stance will not weaken, and thus the dollar will maintain its advantage. If, however, a clear negative surprise comes from that side, USD could at least temporarily lose momentum,” he added.
Nevertheless, the dollar still holds stronger cards today, although after the last move I would have expected more controlled strengthening rather than a sudden burst.
Adam Fuchs also explained where the euro currently stands.
“For the euro the threat remains the strength of the dollar, but also the increasingly weaker resilience of the European economy to external shocks. If the market believes that the Fed remains tougher than the ECB, and Frankfurt cannot be hawkish with weak economic growth, and geopolitical tensions do not fade permanently, then pressure on the common currency may persist,” he said.
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Dollar and euro rates on Thursday, July 2
The dollar to zloty rate on Thursday, July 2 is at 3,76 PLN (-0.15%).
“If the USD/PLN rate can permanently stay above 3.78 PLN, the first target should be around 3,81 PLN, but a more important area could be below 3.84 PLN. After overcoming it, louder voices will approach the round 4 PLN,” Adam Fuchs said.
Chart. Dollar to zloty rate (USD/PLN)
Source: Trading Economics.
The euro to dollar rate reaches 1,13 USD (+0.09%).
“The EUR/USD rate seems to be on a path to test the latest lows above 1.13 USD, which were the lowest indications in over a year. Their permanent breakout can be seen as a technical signal to drop another cent lower, which levels played a resistance role in summer 2024,” he said.
“In a scenario of further dollar strengthening, my next target would be around 1,095 USD, which has shown its significance multiple times in recent years,” he added.
Chart. Euro to dollar (EUR/USD)
Source: Trading Economics.
The euro to zloty rate oscillates around 4,29 PLN (-0.07%).
“In such a setup, the time before the zloty is difficult, as we see from market breadth, when EUR/PLN tests 4,30 PLN, and GBP/PLN reaches round 5 PLN,” the expert summarized.
Chart. Euro to zloty (EUR/PLN)
Source: Trading Economics.
The pound to zloty rate broke the 5 PLN threshold.
Chart. Pound to zloty (GBP/PLN)
Source: Trading Economics.
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Source: Reuters.
