Global financial markets remained under pressure on Wednesday as escalating conflict in the Middle East triggered a broad flight to safety, lifting the U.S. dollar to a near three-month high and weighing heavily on European assets.
The euro fell 0.2% to $1.1590, marking its third straight day of losses after earlier touching its weakest level since late November. The decline followed data released Tuesday showing eurozone inflation rose more than expected in February, even before the outbreak of the Iran conflict intensified market concerns.
Investors resumed selling stocks and bonds as Israeli and U.S. forces struck targets across Iran, fuelling fears of a sustained surge in global energy prices. The military escalation prompted a rush for cash and dollar-denominated assets.
Oil and gas markets reacted sharply. Strikes on Iran disrupted energy exports across the Middle East, while Tehran’s retaliatory attacks on ships and energy infrastructure shut navigation routes in the Gulf and forced production halts from Qatar to Iraq.
The benchmark Brent crude contract climbed 1.9% to $82.94 per barrel — its highest level since July 2024 — extending gains since Friday to 14%. European gas prices have surged 70% since the end of last week.
Currency markets reflected heightened caution. The British pound slipped 0.3% to $1.3323.
The U.S. dollar index, which tracks the greenback against six major currencies, rose 0.1% to 99.208 after earlier hitting its strongest level since November 28.
Against the Japanese yen, the dollar eased 0.2% to 157.52 yen. The U.S. currency gained 0.1% against the offshore Chinese yuan to 6.9287, following mixed February PMI readings that showed official data pointing to a slowdown even as a private-sector survey beat expectations.
Commodity-linked currencies showed mixed performance. The Australian dollar fell 0.6% to $0.6996 despite data indicating fourth-quarter GDP growth accelerated. The New Zealand dollar edged up 0.1% to $0.5898.
Cryptocurrencies were also softer, with bitcoin down 0.4% at $67,776.69 and ether slipping 0.5% to $1,958.81.
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