Euro Dips Below $1.16 on Weak PMI, Middle East Tensions

2026-03-24 09:30 By Joana Ferreira 1 min. read

The euro slipped below $1.16 as investors weighed weaker-than-expected PMI data and ongoing Middle East tensions, raising fears of an energy-driven economic shock.

The latest survey revealed Eurozone business activity growth at a ten-month low in March, with costs surging at the fastest pace in over three years due to soaring energy prices and supply chain disruptions from the war.

Business confidence collapsed, suffering the sharpest decline since Russia’s 2022 invasion of Ukraine.

Adding to the uncertainty, US President Trump delayed strikes on Iran for five days, citing "positive talks", a claim Tehran dismissed as "psychological warfare", though reports suggested indirect negotiations may be underway.

With energy prices spiking, markets are doubling down on ECB rate hike expectations, despite the central bank’s recent decision to hold rates while upgrading inflation forecasts and downgrading growth projections amid deepening regional risks.



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Euro Dips Below $1.16 on Weak PMI, Middle East Tensions
The euro slipped below $1.16 as investors weighed weaker-than-expected PMI data and ongoing Middle East tensions, raising fears of an energy-driven economic shock. The latest survey revealed Eurozone business activity growth at a ten-month low in March, with costs surging at the fastest pace in over three years due to soaring energy prices and supply chain disruptions from the war. Business confidence collapsed, suffering the sharpest decline since Russia’s 2022 invasion of Ukraine. Adding to the uncertainty, US President Trump delayed strikes on Iran for five days, citing "positive talks", a claim Tehran dismissed as "psychological warfare", though reports suggested indirect negotiations may be underway. With energy prices spiking, markets are doubling down on ECB rate hike expectations, despite the central bank’s recent decision to hold rates while upgrading inflation forecasts and downgrading growth projections amid deepening regional risks.
2026-03-24
Euro Tries to Recover as Trump Delays Iran Strikes
The euro pared early losses to trade at $1.155 after President Trump announced a five-day delay in planned US strikes on Iran’s energy infrastructure, calling recent talks "very good and productive" in a Truth Social post. The move temporarily eased fears ahead of today’s 48-hour US deadline for Iran to reopen the Strait of Hormuz, a flashpoint after Trump’s weekend threat of retaliatory strikes if Tehran failed to comply. Meanwhile, Iran’s state-run Fars News Agency, citing sources, denied any direct or indirect negotiations with the US. On the monetary policy front, markets still anticipate three ECB rate hikes in 2026, following last week’s decision to hold rates while raising inflation forecasts and cutting growth outlook amid escalating Middle East risks.
2026-03-23
Euro Slides Further as US-Iran Tensions Escalate
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.
2026-03-23