FX.co ★ Euro Drops Near Six-Week Low Amid Middle East Unrest

The euro slipped to $1.161, approaching a six-week low, as escalating tensions in the Middle East dampened expectations for a quick reopening of the Strait of Hormuz and heightened worries about the Eurozone’s economic outlook. Brent crude rose to about $97 a barrel following reports of US airstrikes on an Iranian military facility and the announcement of new sanctions aimed at Iran’s income from vessels passing through the strait. A US official stressed that the strikes were defensive and reiterated Washington’s commitment to last month’s ceasefire. Further adding to regional volatility, Kuwait said it had intercepted hostile drone and missile threats. In response to the deteriorating backdrop, money markets increased wagers on further European Central Bank rate hikes, now pricing in just under 65 basis points of additional tightening this year, compared with just under 60 basis points late on Wednesday.