Euro Slides to Mid-January Lows

The euro held early losses, trading around $1.16, its weakest level since mid-January, as the US dollar strengthened on safe-haven demand amid a sharp escalation in the Middle East conflict, despite stronger-than-expected Eurozone inflation data. US President Donald Trump said the military campaign against Iran could last four to five weeks but emphasized that US forces are prepared to extend operations if needed. Meanwhile, higher energy costs following the formal closure of the Strait of Hormuz and the ongoing halt of Qatari LNG exports are expected to intensify inflationary pressures across Europe, potentially prompting the ECB to adopt a more hawkish monetary policy stance. Eurozone February data showed annual inflation unexpectedly at 1.9% and core inflation at 2.4%, both above forecasts. Last week, ECB President Christine Lagarde said headline inflation is expected to approach the 2% target over the medium term, though Middle East tensions cloud the outlook.

The euro weakened toward $1.16, marking its lowest level since mid-January, as the US dollar gained on heightened safe-haven demand amid a sharp escalation in the Middle East conflict. US President Donald Trump stated that US munitions stockpiles at medium and upper-medium grades are at record highs and “virtually unlimited,” adding that wars could be sustained “forever.” At the same time, a spike in natural gas and crude oil prices, after the formal closure of the Strait of Hormuz and the continued halt of Qatari LNG exports, intensified concerns over global energy supply. The surge in energy costs is expected to fuel inflationary pressures in Europe, potentially pushing the European Central Bank toward a more hawkish policy stance. Investors are also awaiting key inflation data from Italy and the broader Eurozone, due later today, for further clues on the region’s price outlook and monetary policy trajectory.

EURUSD decreased to 1.17, the lowest since January 2026. Over the past 4 weeks, Euro US Dollar lost 0.6%, and in the last 12 months, it increased 12.02%.