The euro slipped to $1.163, hovering near one-month lows, as investors assessed Middle East conflict developments and braced for prolonged high energy prices that risk fueling broader inflation and dampening economic growth. Brent remained close to a four-year high after US President Trump delayed further strikes on Iran but ordered the military to prepare for a "full, large-scale assault" if negotiations fail. Market expectations for European Central Bank tightening have moderated slightly, though traders still price in an 80% chance of a 25-basis-point rate hike next month, with two more likely by year-end. Recent data underscored the challenges: Eurozone growth slowed to 0.1% in Q1 2026, the weakest since Q2 2025, due to energy supply constraints tied to the Middle East conflict, while inflation rose to 3% in April, the highest since September 2023 and well above the ECB’s 2% target. Investors now look to Thursday’s flash S&P Global PMI surveys for further monetary policy clues.