|

EUR/USD weakens as US-Iran conflict strengthens the US Dollar

  • EUR/USD drops over 1% as investors flock to the safe-haven US Dollar amid Middle East tensions.
  • Oil supply risks through the Strait of Hormuz raise inflation concerns for central banks.
  • US ISM Manufacturing PMI eases to 52.4 in February, while Eurozone HCOB Manufacturing PMI holds steady at 50.8.

The Euro (EUR) edges lower against the US Dollar (USD) on Monday, with EUR/USD sliding more than 1% as investors rotate into the safe-haven Greenback amid escalating geopolitical tensions in the Middle East. At the time of writing, the pair trades around 1.1683, marking its lowest level in over a month.

A joint US-Israel strike on Iran over the weekend dampened risk appetite and boosted demand for the US Dollar. Iran retaliated by launching missile and drone attacks targeting US military bases across several Gulf nations, seeking revenge after the strikes resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

US President Donald Trump said on Monday that “a big wave has yet to come” in the war with Iran, CNN reported. Meanwhile, US Secretary of Defense Pete Hegseth said that the US is “not ruling out any options,” adding that “we fight to win.”

Any prolonged conflict could disrupt Oil supply through the Strait of Hormuz, pushing energy prices higher and adding to global inflation pressure, which could complicate the monetary policy outlook for major central banks.

Austria’s central bank governor and European Central Bank (ECB) policymaker Martin Kocher said the ECB should be ready to move interest rates “in either direction” if uncertainty intensifies. Separately, ECB’s Pierre Wunsch said the central bank may reconsider its policy stance if oil prices stay elevated.

Meanwhile, the Federal Reserve (Fed) was already in a wait-and-see mode before considering any monetary policy easing, as inflation in the United States remains sticky and continues to run above the 2% target. As a result, traders have scaled back expectations for near-term rate cuts, providing an additional tailwind for the US Dollar.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.64, its highest level since January 22.

On the data front, the US ISM Manufacturing Purchasing Managers' Index (PMI) eased slightly to 52.4 in February from 52.6 in January. The Manufacturing Employment Index rose to 48.8 from 48.1, while the New Orders Index declined to 55.8 from 57.1. The Manufacturing Prices Paid Index jumped sharply to 70.5 from 59.0.

In the Eurozone, the HCOB Manufacturing PMI stood at 50.8 in February, unchanged from January and in line with expectations.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD1.12%0.73%0.83%0.47%0.70%1.21%1.51%
EUR-1.12%-0.39%-0.29%-0.64%-0.42%0.08%0.39%
GBP-0.73%0.39%0.08%-0.26%-0.03%0.47%0.78%
JPY-0.83%0.29%-0.08%-0.33%-0.11%0.39%0.69%
CAD-0.47%0.64%0.26%0.33%0.23%0.72%1.03%
AUD-0.70%0.42%0.03%0.11%-0.23%0.51%0.81%
NZD-1.21%-0.08%-0.47%-0.39%-0.72%-0.51%0.30%
CHF-1.51%-0.39%-0.78%-0.69%-1.03%-0.81%-0.30%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

More from Vishal Chaturvedi
Share:

Editor's Picks

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis
 

GBP/USD slips below key averages as geopolitical risks mount

GBP/USD fell about 0.35% on Tuesday, settling around 1.3350 after slipping below the 200-day Exponential Moving Average for the first time since early December. The pair has pulled back sharply from its late-January high near 1.3870, shedding over 500 pips in a series of lower highs and lower lows. 

Gold moves closer to $5,150 amid sustained safe-haven flows

Gold climbs back above $5,100 during the Asian session on Wednesday, moving away from an over one-week low, touched the previous day. Sustained safe-haven flow, amid escalating geopolitical tensions in the Middle East, acts as a tailwind for the bullion. However, a bullish US Dollar and reduced bets for more aggressive easing by the US Fed might keep a lid on the non-yielding yellow metal ahead of the US ADP report and ISM Services PMI later today.

Ethereum: Whales step up buying as short positions contract

After holding firm heading into the last weekend, Ethereum whales have returned to action, pouncing on the volatility stemming from escalating military actions between the US and Iran.

Energy shock 2.0: Why rising Gas prices could hit the Euro

Even without a confirmed, sustained disruption, the mere risk to a key global energy chokepoint is enough to inject a significant premium into European Gas markets. And for the Euro, that matters.

Ripple falters amid sell-off jitters and negative funding rates

Ripple (XRP) has come under pressure, drifting lower to $1.35 at the time of writing on Tuesday. The over 2% correction looks poised to erase the previous day’s gains, which lifted the remittance token to $1.42.