The EUR/USD pair recovers part of its early decline during Monday’s late Asian session, though it remains down around 0.25% near the 1.1780 level.
Earlier in the session, the Euro came under heavy pressure against the US Dollar as investors rushed toward safe-haven assets following escalating tensions involving Iran, Israel, and the United States over the weekend. The intensifying geopolitical conflict triggered a broader risk-off sentiment across financial markets.
Multiple airstrikes and reported tanker attacks in the Strait of Hormuz have driven crude oil prices sharply higher. Rising energy costs pose a challenge for the Eurozone economy, which depends significantly on imported oil to meet its energy demands. Higher oil prices could weigh on growth prospects and keep pressure on the Euro in the near term.
On the economic front, traders are awaiting the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for February, scheduled for release on Tuesday. The inflation figures are expected to shape expectations regarding the European Central Bank’s (ECB) future monetary policy direction. Recent data showed that Germany’s flash HICP rose 2.0% year-on-year, slightly below both forecasts and the previous reading of 2.1%, signaling moderating price pressures.
Meanwhile, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, has eased from earlier highs but continues to trade about 0.23% higher near 97.85 as cautious market sentiment persists.
Looking ahead, investors will closely monitor key US labor market indicators this week, particularly the February Nonfarm Payrolls (NFP) report. In the near term, attention turns to the US ISM Manufacturing PMI data for February, due later in Monday’s session at 15:00 GMT, which could provide fresh direction for the Dollar.
