The currency gained following remarks by US President Donald Trump, who, in his address to the nation, not only failed to signal a near-term resolution of the military conflict with Iran but instead warned of further escalation. The official announced an “extremely strong strike” against the Islamic Republic within the next two to three weeks, which unsettled investors concerned about the possibility of a ground operation and retaliatory actions by Tehran targeting energy and industrial infrastructure across the Middle East, as well as prolonged risks of rising energy prices and a global economic slowdown.
Iranian authorities also stated their readiness to engage in hostilities for at least six months, roughly aligning with the timeline of US midterm elections, where the Republican Party could potentially lose its majority.
Meanwhile, February business activity data in the US manufacturing sector came in positive: the S&P Global index rose from 51.6 points to 52.3 points, slightly below the forecast of 52.4 points, while the Institute for Supply Management (ISM) index increased from 52.4 points to 52.7 points against expectations of 52.3 points. Retail sales also rose by 0.6% month-over-month, exceeding forecasts of 0.5%, while annual growth accelerated from 3.2% to 3.7%. Overall, the key sector of the US economy remains stable despite the energy crisis, reducing the likelihood of monetary policy adjustments by the Federal Reserve.
In this context, St. Louis Federal Reserve President Alberto Musalem stated today that there is no need to change the current policy stance, as inflation risks have re-emerged and economic prospects remain uncertain.
Eurozone
The euro is losing ground against the US dollar but strengthening against the pound and showing mixed dynamics against the yen.
In the absence of major economic releases, price movements are driven by external factors. Bank of Italy Governor Fabio Panetta noted that rising oil prices raise concerns about financial stability in the eurozone. He added that shifts in global risk perception could quickly put pressure on government bonds, particularly given high public debt levels across many countries.
Business confidence in Germany’s chemical industry also declined. According to the IFO Institute, the index fell from –16.7 points to –25.0 points, while the expectations sub-index dropped from –12.1 points to –17.9 points. Experts note that the Middle East crisis is exerting strong pressure on the sector, as oil serves both as an energy source and industrial feedstock. Rising costs are being passed on to related industries, negatively affecting Germany’s broader manufacturing sector.
United Kingdom
The pound is losing ground against its main counterparts — the euro, yen, and US dollar.
Investors focused on an interview with Bank of England Governor Andrew Bailey, who told Reuters that markets should not price in rate hikes in the near future. He emphasized that policymakers must carefully balance risks to economic growth, employment, and inflation. Following these comments, analysts at JPMorgan Chase revised their forecasts from two rate hikes this year to just one. Additionally, inflation expectations among UK businesses rose to 3.7% for the next 12 months from 3.4% previously, reaching the highest level since October last year.
Japan
The yen is weakening against the US dollar but strengthening against the pound and showing mixed dynamics against the euro.
In the absence of major releases, movements remain driven by external factors. Reports indicate that the government plans to use 800 billion yen from reserve funds to subsidize gasoline prices at around 170 yen per liter. These measures aim to support household spending and economic activity. On Friday at 02:30 (GMT+2), investors will focus on March services PMI data, which is expected to decline from 53.8 points to 52.8 points, potentially adding pressure on the yen.
Australia
The Australian dollar is weakening against the US dollar and showing mixed dynamics against the euro, yen, and pound.
Trade data remain in focus: exports increased by 4.9% after a 1.6% decline in January, while imports dropped by 3.2% following a 1.0% rise, leading to an expansion of the trade surplus from 2.258 billion AUD to 5.686 billion AUD. The economy remains relatively resilient, although external trade indicators may slow amid negative factors related to US-Iran tensions.
Oil
Oil prices continue to rise, supported by Donald Trump’s rhetoric about a potential strike on Iran within two to three weeks. Investors fear such developments could further disrupt shipping through the Strait of Hormuz, where traffic has already dropped to just 10% of normal volumes, and trigger retaliatory attacks on energy infrastructure across the Persian Gulf, reducing oil production.
Considering that the Bab el-Mandeb Strait, another critical oil transit route, is effectively controlled by the Ansar Allah movement, oil prices could potentially reach 200.00 in the medium term if the conflict escalates. Meanwhile, US crude inventories continue to build but have failed to curb price growth driven by geopolitical risks. According to the US Energy Information Administration (EIA), inventories rose by 5.451 million barrels last week, compared to expectations of 1.800 million barrels.
