EUR\/USD recovered part of its early fall in late Asian trading on Monday, but remained down 0.25% near 1.1780. The Euro weakened earlier as markets moved towards safe-haven assets after conflict between Iran, Israel, and the United States began over the weekend. <\/p>\n
Airstrikes and reported tanker attacks in the Strait of Hormuz lifted oil prices, pointing to higher energy costs ahead. This tends to weigh on the Eurozone, which depends heavily on imported oil for energy needs. <\/p>\n
Attention is on preliminary Eurozone Harmonised Index of Consumer Prices (HICP) data for February, due on Tuesday. The release may affect expectations for European Central Bank policy, after flash German HICP rose 2% year on year, below forecasts and down from 2.1%. <\/p>\n
The US Dollar Index (DXY) gave up part of its earlier rise but was still up 0.23% near 97.85 in risk-off conditions. Markets are also watching US jobs data this week, including February Nonfarm Payrolls, while February US ISM Manufacturing PMI is due at 15:00 GMT on Monday.<\/p>\n
With the sudden outbreak of conflict, we are seeing a classic flight to safety into the US Dollar. The immediate play is on volatility, as sharp moves are likely based on headlines from the Middle East. Buying options, such as straddles or strangles on the EUR\/USD, can be a way to profit from these large price swings in either direction.<\/p>\n
The fundamental pressure on the Euro is clear, given the attacks on tankers in the Strait of Hormuz. We remember how the 2022 energy crisis weighed heavily on the Eurozone economy, and with the bloc still importing over 90% of its crude oil, this situation looks very similar. This makes holding bearish positions on the Euro, perhaps through buying put options, a core strategy for the coming weeks.<\/p>\n
The US Dollar Index pushing towards 98 highlights its role as the ultimate safe haven in times of war. The conflict’s location is critical, as roughly a fifth of the world’s daily oil supply passes through the Strait of Hormuz, making this a global energy issue. This widespread risk underpins the dollar’s strength against currencies like the Euro.<\/p>\n
However, we must watch tomorrow’s Eurozone inflation data closely as it could cause a short-term reversal. The recent German inflation figure came in softer than expected, and if the broader Eurozone data confirms this disinflationary trend, it will only add fuel to the bearish case for the Euro. A surprisingly high inflation number, though, could trigger a sharp, temporary rally.<\/p>\n
On the US side, today’s manufacturing data and this week’s Nonfarm Payrolls report are now even more important. A strong jobs report would reinforce the “US economic safe haven” narrative and likely send the EUR\/USD lower. Any sign of weakness in the US data, however, could temporarily halt the dollar’s advance and provide an exit point for short-term trades.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD trims losses amid Middle East tensions; oil climbs, Euro pressured; focus shifts to Eurozone inflation, US jobs.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50494","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50494","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50494"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50494\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}