Euro Slides Further as US-Iran Tensions Escalate

2026-03-23 08:29 By Joana Ferreira 1 min. read

The euro extended its decline to $1.15, close to its weakest level since July 2025, as investors sought safety in the US dollar amid escalating Iran conflict risks.

A 48-hour US deadline for Iran to reopen the Strait of Hormuz expires today, with President Trump threatening strikes on Iranian power plants if Tehran fails to comply.

Iran has vowed retaliatory attacks on Gulf energy and desalination facilities, raising fears of a broader regional escalation.

Against this backdrop, traders intensified bets on ECB tightening, now pricing in at least three rate hikes in 2026.

The central bank held rates steady last week but raised inflation forecasts and cut growth projections, citing mounting risks from the Middle East crisis.

Joachim Nagel hinted at a potential April rate hike if inflation pressures worsen, while Francois Villeroy de Galhau reaffirmed the ECB’s commitment to act decisively.



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