FX.co ★ Euro Slides to Two-Week Low on US-Iran Standoff

The euro hovered just below $1.17, its weakest level in two weeks, and is on course for a 0.7% weekly loss against the US dollar. The decline reflects renewed market anxiety as US-Iran talks stall and the Strait of Hormuz remains effectively closed, undermining earlier hopes for a diplomatic breakthrough to end the conflict. Investor focus now turns to next Thursday’s European Central Bank policy meeting, where officials are widely expected to leave interest rates unchanged. The ECB is taking a wait-and-see stance as it evaluates the effects of recent macroeconomic data and geopolitical tensions—particularly the Middle East conflict—against its earlier forecasts. Despite this cautious posture, money markets are fully pricing in two quarter-point rate hikes in 2026 and assigning a 55% probability to a third increase by the end of that year.