Euro Heads for Over 2% Monthly Loss as Middle East Risks Weigh

2026-03-30 07:38 By Joana Ferreira 1 min. read

The euro held steady at $1.15 by the end of March, poised for a monthly decline of over 2% against the US dollar.

Traders offloaded riskier assets as concerns mounted over the economic fallout from the escalating Middle East conflict, with reports suggesting thousands of US troops were preparing for a potential ground operation, despite Washington’s insistence that diplomatic talks with Iran were progressing.

Investors also turned their attention to a wave of key economic data due this week, including March inflation flash estimates from Europe’s major economies.

Market sentiment has shifted sharply on ECB policy, with traders now pricing in at least two interest rate hikes this year and a growing possibility of a third, abandoning earlier expectations of a 40% chance of a rate cut in 2026.



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Euro Heads for Over 2% Monthly Loss as Middle East Risks Weigh
The euro held steady at $1.15 by the end of March, poised for a monthly decline of over 2% against the US dollar. Traders offloaded riskier assets as concerns mounted over the economic fallout from the escalating Middle East conflict, with reports suggesting thousands of US troops were preparing for a potential ground operation, despite Washington’s insistence that diplomatic talks with Iran were progressing. Investors also turned their attention to a wave of key economic data due this week, including March inflation flash estimates from Europe’s major economies. Market sentiment has shifted sharply on ECB policy, with traders now pricing in at least two interest rate hikes this year and a growing possibility of a third, abandoning earlier expectations of a 40% chance of a rate cut in 2026.
2026-03-30
Euro Under Pressure Amid US-Iran Tensions and Spanish Inflation Jump
The euro edged lower to $1.152 as traders weighed the latest in US-Iran negotiations, including a 10-day extension of President Donald Trump’s deadline for a deal to April 6. While German Foreign Minister Johann Wadephul confirmed indirect contacts and upcoming direct talks in Pakistan, the muted market reaction suggests skepticism that a breakthrough is imminent, with President Trump seen as buying time to bolster military presence in the region. Meanwhile, Spain’s inflation surged to 3.3% in March, the highest since June 2024, though below expectations of 3.9%. The shift in ECB policy expectations has been stark: traders now price in at least two interest rate hikes this year, with a strong chance of a third, reversing earlier bets on a 40% likelihood of a 2026 cut.
2026-03-27
Euro Holds Below $1.16 on Middle East Tensions
The euro remained under pressure below $1.16 as investors shunned riskier assets amid escalating US-Iran tensions. Washington insisted Iran seeks a deal while deploying more troops to the region, but Iran’s foreign minister dismissed talks, instead demanding control over the Strait of Hormuz. Markets now expect two to three ECB rate hikes by year-end, following ECB President Christine Lagarde’s warning that the bank stands ready to act "at any meeting" to counter inflation risks from energy shocks. German consumer confidence also slumped to a two-year low heading into April, highlighting the conflict’s economic fallout.
2026-03-26