Escalating US-Iran conflict and Strait of Hormuz closure push oil prices up 4%, weighing on the eurozone’s import-dependent economy.
The Euro (EUR) edges lower against the US Dollar (USD) in early trading, with the EUR/USD pair hovering near 1.1400 after failing to break above 1.1460 on Friday. Weakening momentum indicators suggest further downside, though the pair remains within its two-week range of 1.1370-1.1460.
Renewed hostilities between the US and Iran over the weekend dampened risk appetite, as Tehran announced retaliatory strikes on US bases and declared the Strait of Hormuz closed. The US military confirmed escorting ships through the waterway, but oil prices surged over 4% from last week’s levels, adding inflationary pressure on the eurozone.
Focus shifts to upcoming speeches by ECB and Fed officials, followed by June’s US Consumer Price Index data and Fed testimony later this week.