European Currency Loses Steeze as Middle East Burns
The European single currency, the euro, loses its steeze in the forex market as the Iran war continues to boost demand for the US dollar amid a drive toward safer assets.
Interest in gold and other precious metals has declined sharply, dragging their prices lower as investors favour the dollar after President Donald Trump attacked Iran.
With a significant surge in EU gas prices, the dollar strength has continued to undermine the Euro, which extended its decline toward $1.15 as investors sought safety in the US dollar.
Natural gas prices in the EU have risen by more than 30 per cent since the start of the war on February 28, spiking after Israel’s attack on Iran’s critical South Pars gasfield and subsequent Iranian attack on Qatar’s Ras Laffan.
The war continues to escalate, with no end in sight. A 48-hour US deadline for Iran to reopen the Strait of Hormuz expires today, with President Trump threatening strikes on Iranian power plants if Tehran fails to comply.
The European Union has urged member states to start early on meeting next winter’s gas storage targets after Iranian attacks on Gulf energy facilities caused prices to surge on global markets.
Energy Commissioner Dan Jorgensen sent a letter Saturday urging the bloc’s members to get to work “as early as possible” in the coming months to “mitigate pressure on prices and avoid [an] end-of-summer rush”, asking them to consider cutting their so-called filling target by 10 percentage points to 80 per cent.
Meanwhile, Iran has vowed retaliatory attacks on Gulf energy and desalination facilities, raising fears of a broader regional escalation. Against this backdrop, traders intensified bets on ECB tightening, now pricing in at least three rate hikes in 2026.
The central bank held rates steady last week but raised inflation forecasts and cut growth projections, citing mounting risks from the Middle East crisis.
Joachim Nagel hinted at a potential April rate hike if inflation pressures worsen, while Francois Villeroy de Galhau reaffirmed the ECB’s commitment to act decisively. Oil Climbs as U.S. Threatens to Attack Iran’s Power Plant
