Geopolitical risks in the Gulf and rising oil prices limit the Euro’s recovery despite a softer US Dollar Index.
The Euro remains nearly unchanged above 1.1400 against the US Dollar, constrained by escalating tensions in the Gulf and a recent surge in oil prices. A modest pullback in the US Dollar Index has offered slight support, but concerns over potential crude shortages keep risk appetite in check.
Investors remain cautious as US-Iran hostilities intensify, with reports of a closed Strait of Hormuz and a Houthi blockade on Saudi vessels in the Red Sea. However, hopes for a 10-day ceasefire proposal have tempered extreme risk aversion. In Europe, markets await Thursday’s ECB decision, with traders pricing in a potential September rate hike.
The US economic calendar is light this week, shifting focus to the ECB and geopolitical developments. Preliminary S&P Global PMI data later this week may provide limited direction amid broader uncertainty.