The dollar is experiencing a broad-based correction Tuesday after trade concerns on Monday failed to escalate into the second day of the week. With data light, the headlines are focused on the U.S.’s new sanctions on Iran and the Turkish lira falling to fresh lows.
EUR/USD trying to hold onto 1.16
After spending most of Monday gaining across the board, the U.S. dollar is experiencing a correction Tuesday.
EUR/USD climbed its way up to 1.1605 after starting the day closer to 1.155. The euro dipped at one point due to worse-than-expected German industrial production numbers for June.
The USD/JPY pair fell from 111.3 to 111.07 Tuesday morning and is still on a downward trajectory.
GBP/USD is moving the least, holding around the 1.29 midpoint. The pound is still being held down by Brexit pessimism.
U.S. sanctions impact Iran
President Trump signed an executive order to stop the purchase of dollar banknotes while also banning the import of Persian rugs and pistachio nuts, and targeting the auto industry.
The move is already having an impact on investment into the Iranian economy. German automaker Daimler AG halted plans to build Mercedes Benz trucks in the country.
The European Union has condemned the sanctions by the U.S., standing by a 2015 deal that provided Iran relief from sanctions.
The Iranian rial plunged ahead of the sanctions and Iran’s central bank abandoned currency controls it introduced this year in hopes to stop the currency from falling further. The foreign exchange rate for transactions will be determined by the market, except for essential goods and drugs, the bank said.
Turkey’s lira crawls out of hole
The rial isn’t the only currency slipping from U.S. sanctions. Turkey’s lira slid against the dollar for seven days in a row and fell by the most in a decade on Monday.
The lira attempted to crawl out of the hole Tuesday, making some gains before slipping again. The lira got some relief from reports that Turkish officials will head to Washington to discuss the sanctions.
Turkey’s central bank has kept quiet, prompting investors and economist to call for rate hikes.
The USD/TRY pair is back down around 5.27.