The euro extended its decline against the US dollar in European trading on Monday, falling for a third consecutive session as demand for the greenback remained strong amid mounting concerns over the escalating conflict between the United States and Iran.

Rising global oil prices at the start of the week renewed inflationary pressures on European Central Bank policymakers, raising concerns that inflation across the eurozone could accelerate once again.

The European Central Bank is scheduled to meet on Wednesday and Thursday for its fifth monetary policy meeting of 2026, with markets overwhelmingly expecting interest rates to remain unchanged.

The Price

The euro fell around 0.2% against the dollar to $1.1424 after opening at $1.1438 and reaching an intraday high of $1.1444.

The euro ended Friday down less than 0.1% against the dollar, marking its second consecutive daily decline amid renewed concerns over the Iran conflict.

The single currency gained 0.2% against the dollar last week, posting its second weekly advance in the past three weeks as it recovered from lower levels.

US dollar

The dollar index rose around 0.2% on Monday, extending gains for a third straight session and reflecting continued strength in the US currency against a basket of major and minor currencies.

Investors continue to favor the dollar as a safe-haven asset as military strikes between the United States and Iran intensify and shipping traffic through the Strait of Hormuz declines.

Global oil prices

Oil prices climbed around 3% on Monday, extending gains for a second consecutive session and reaching their highest level in six weeks amid escalating Middle East tensions and Iranian threats to halt all traffic through the Strait of Hormuz.

The rise in global oil prices is renewing concerns over accelerating inflation, potentially prompting central banks to raise interest rates in the near term, a sharp reversal from pre-war expectations that rates would remain unchanged or be cut for an extended period.

Latest developments in the Iran conflict

The United States launched a fresh wave of airstrikes against targets inside Iran for a ninth consecutive day.

The US strikes targeted military sites linked to Iran's missile and defence capabilities in an effort to weaken Tehran's ability to control the Strait of Hormuz.

Iran's Revolutionary Guard launched coordinated retaliatory attacks using ballistic missiles and drones against military bases hosting US forces across the region.

Iran said that not "a single drop" of oil or gas would pass through the Strait of Hormuz if US military operations continued, escalating threats surrounding one of the world's most important energy routes.

Shipping traffic through the Strait of Hormuz declined sharply as security risks, inspections, and reciprocal attacks continued.

The US Navy said it had intercepted and rerouted six commercial vessels and disabled a seventh as part of efforts to enforce a strict naval blockade on Iranian ports and isolate the country's coastline.

European interest rates

Amid rising global oil prices, money markets increased the probability of the European Central Bank raising interest rates by 25 basis points in September to above 95%.

Investors are awaiting additional eurozone data on inflation, unemployment, and wages to reassess those expectations.

The European Central Bank will meet on Wednesday and Thursday this week for its fifth monetary policy meeting of 2026, with markets almost fully pricing in no change to interest rates.