Middle East Tensions Weigh Heavily on EUR/USD Amid Rising Oil Prices and US Interest Rates

The EUR/USD pair struggled to gain upward momentum in New York foreign exchange trading on January 1st. Reports of U.S. military strikes on Iranian targets sent crude oil futures soaring by nearly 5%, causing concerns over resurgent inflation and a rise in U.S. long-term interest rates.

This triggered dollar buying as investors sought safe-haven assets during times of crisis, weighing heavily on the euro. As a result, the EUR/USD pair fell to an intraday low of $1.1585, down roughly $0.0011 from midnight's price of $1.1597.

Dollar-yen maintained firm footing, trading at 160.16 yen as of 2:00 a.m., up about 9 sen from 160.07 yen at midnight. This resilience in dollar demand was driven by the U.S.-Japan interest rate differential and rising U.S. interest rates.