The euro slipped below 1.1600 against the US dollar on Tuesday morning, settling near 1.1575 as geopolitical tensions disrupted its three-day rally. European session trading saw the single currency lose momentum amid escalating concerns over the US-Iran conflict and potential closure of the Strait of Hormuz, a critical global oil transit route.
Traders are adopting a risk-off posture, driving demand for safe-haven assets like the dollar as military tensions threaten global energy supply chains. The Strait of Hormuz handles roughly one-fifth of the world’s petroleum traffic, making any disruption a systemic risk to international markets. Currency dealers are closely monitoring developments as heightened Middle East instability typically triggers volatility across forex, commodities, and equity markets.
The euro’s weakness reflects broader uncertainty about European economic exposure to energy price shocks should the conflict escalate further. Dollar strength is expected to persist while geopolitical risks remain elevated.
FXnCO Insight
Position for continued dollar strength and watch oil volatility as a leading indicator for further euro weakness while US-Iran tensions remain unresolved.
Source: FXStreet