Middle East Tensions Boost Dollar, Pressure Euro

Despite US energy secretary Chris Wright's expectation that the US-Israel conflict with Iran could conclude within "the next few weeks," potentially leading to oil supply rebounds and lower energy costs, Israel's military plans for its campaign to continue for "at least three more weeks." Recent US forces targeted military sites on Kharg Island, a critical Iranian oil export hub, though President Trump stated oil infrastructure was not hit. Iran has threatened retaliation against US-linked oil facilities.

French President Emmanuel Macron called for immediate restoration of freedom of navigation through the Strait of Hormuz and urged Iran to cease "unacceptable attacks" in the region. Any further rise in geopolitical risks is anticipated to strengthen the US Dollar, acting as a significant headwind for the EUR/USD pair in the near term.