The euro eased to $1.15 after hitting a three-and-a-half-year high of $1.163 on June 12, as global markets were unsettled by escalating Middle East tensions. Overnight, Israel struck Iran’s nuclear facilities and key personnel, prompting fears of a wider conflict. Israel says Iran’s nuclear program is an existential threat and vows to continue its operations.
Iran responded by launching hundreds of drones and warned of further retaliation. On the monetary policy front, the euro has been supported by diverging signals from the European Central Bank and the US Federal Reserve. Recent ECB comments reinforced expectations of a pause in its easing cycle to assess the impact of new US tariffs. Meanwhile, the dollar weakened amid softer US inflation data and rising trade tensions, fueling speculation that the Fed could cut rates as early as September.
