FX.co ★ Euro Remains Under Pressure as Dollar Gains on Iran Tensions

The euro was little changed at $1.152 in muted trading, as investors moved into the dollar amid mounting uncertainty over the protracted Iran conflict and rising oil prices. Stronger-than-expected US employment data released last week further dampened expectations for Federal Reserve interest rate cuts. US President Trump warned Iran of severe consequences if it failed to reopen the Strait of Hormuz by Tuesday, though US intelligence reportedly views Iranian compliance as unlikely. At the same time, there were reports of talks on a 45-day truce involving the US, Iran, and regional mediators, which could help ease tensions. Crude oil prices hovered near multi-year highs, intensifying inflation worries and leading investors to effectively rule out any Fed rate cuts this year. In Europe, market expectations have swung sharply: investors now foresee three interest rate hikes in 2026, a marked shift from pre-conflict projections that had pointed to no tightening and even hinted at possible monetary easing.