FX.co ★ Euro Dips as Trump’s Address Fuels Middle East Uncertainty

The euro slipped back toward $1.15 as caution re-emerged in financial markets following President Donald Trump’s prime-time address, which failed to provide a clear timeline for resolving the Middle East conflict. Trump said the US operation was nearing completion but simultaneously promised more aggressive action over the next two to three weeks, including potential strikes on power infrastructure. The lack of any new rationale for continuing the war further undermined market sentiment. Against this backdrop of persistent uncertainty and mounting inflation concerns, traders are reassessing the likely path of European Central Bank policy. Investors now expect three interest rate hikes in 2026, up from two just a day earlier. Prior to the outbreak of the conflict, markets had largely priced in no rate increases at all, with some participants even betting on possible monetary easing.