The euro was steady around $1.15, attempting to claw back losses after recently touching its weakest level since last July. Market sentiment remained dominated by escalating tensions in the Middle East, downbeat German confidence data, and a crowded calendar of central bank meetings.
Geopolitical risk stayed in sharp focus after US President Donald Trump signaled that military operations in Iran would extend beyond this week, while Israeli officials cautioned that the conflict could drag on for “several more weeks.”
On the economic front, German investor confidence slumped in March amid mounting concerns that rising prices could undermine the country’s recovery. The deterioration in sentiment added to pressure on policymakers ahead of the European Central Bank’s meeting on Thursday.
The ECB is widely expected to leave interest rates unchanged, with President Christine Lagarde likely to outline how the bank intends to protect the eurozone from inflationary pressures linked to the conflict. Money markets now fully price in a rate hike in July and assign an 85% probability to a second increase before year-end.
