The Euro (EUR) is struggling against the US Dollar (USD), trading near a five-week low around 1.1680, primarily due to escalating geopolitical tensions in the Middle East.
The conflict involving the US, Israel, and Iran has propelled global oil prices up by nearly 8% as Iran threatens to disrupt shipping through the critical Strait of Hormuz, which handles 20% of global crude. This surge in energy costs heightens inflation risks for the Eurozone, while simultaneously boosting safe-haven demand for the US Dollar, pushing the DXY near 98.50.
Despite these inflationary pressures, both the European Central Bank (ECB) and the Federal Reserve (Fed) are expected to maintain their current monetary policies in the near term. Investors are awaiting Eurozone HICP data for February, with headline and core inflation anticipated to remain steady at 1.7% and 2.2% year-on-year, respectively.
ECB President Lagarde has reiterated confidence in inflation stabilizing at the 2% target, emphasizing a data-dependent approach.
Middle East Conflict Drives Oil Prices Up 8%, Weakening Euro Against Strong Dollar(current)
