The Euro fell to a one-week low near 1.1406 as Middle East tensions boosted the Dollar, overshadowing hawkish ECB remarks.
The Euro retreated to its weakest level since last Wednesday, closing at 1.1406, despite hawkish-leaning comments from a typically dovish European Central Bank Governing Council member. The remarks, which suggested the inflation fight is not over, failed to sustain early gains near 1.1450 as markets focused on geopolitical risks in the Strait of Hormuz.
Iranian strikes on commercial shipping and a U.S. military response triggered a late-session haven bid for the Dollar, erasing the Euro’s earlier momentum. The ECB’s hawkish signals followed Monday’s warning from an Executive Board member about persistent inflation, yet markets price only one more quarter-point hike this year, with minimal odds for the July 23 meeting.
Brent crude oil surged as the geopolitical flare-up dominated sentiment, capping a session that began with subdued positioning ahead of Wednesday’s FOMC minutes. The Dollar’s strength underscored how macro narratives can be upended by sudden risk events.