The Euro rose in the European market on Monday against a basket of global currencies, resuming gains that briefly paused on Friday against the U.S. dollar. The currency is approaching a multi-week high, benefiting from a slowdown in the greenback as investors assess developments in peace talks between the United States and Iran.

ECB President Christine Lagarde stated last week that the option of raising interest rates was discussed extensively during the recent meeting, noting that the upcoming meeting in June will be the "appropriate time" to re-evaluate the path of monetary policy.

Price Overview

* Euro Exchange Rate Today: The Euro rose against the dollar by approximately 0.25% to ($1.1747), up from Friday's closing price of ($1.1719), recording a session low of ($1.1720).

* The Euro ended Friday's trading down 0.1% against the dollar due to correction and profit-taking, after having reached a near two-week high of $1.1785 earlier in the session.

The U.S. Dollar

The dollar index fell by more than 0.2% on Monday, resuming losses that paused on Friday. This decline reflects a retreat in the U.S. currency against a basket of major and minor currencies.

The decline comes as safe-haven demand for the dollar slows while markets evaluate recent intensive talks between the U.S. and Iran. Official Iranian media reported that the U.S. conveyed its response to a 14-point Iranian proposal through Pakistan. Tehran seeks an end to the U.S. blockade and a postponement of nuclear negotiations, while Washington remains insistent on prioritizing a nuclear deal.

President Donald Trump stated that Washington would begin efforts Monday morning to release ships stranded in the Strait of Hormuz as a humanitarian gesture to assist neutral nations affected by the U.S.-Israeli war with Iran.

European Interest Rates

* In line with expectations, the ECB kept its key interest rates unchanged last week at 2.15%—the lowest level since October 2022—marking the seventh consecutive meeting without a change.

* President Lagarde noted that the Governing Council reached a unanimous decision to hold, despite a lengthy discussion regarding the "option to hike," and confirmed that June will be the "appropriate time" to reassess monetary policy.

* Following the meeting, money market pricing for a 25-basis-point rate hike by the ECB in June rose from 35% to 55%.

* Investors are now awaiting further Eurozone economic data regarding inflation, unemployment, and wages to further refine these interest rate expectations.

JThe Japanese yen rose in the Asian market on Monday against a basket of major and minor currencies, resuming gains that had briefly paused in the previous session against the U.S. dollar. The currency moved closer to a two-month high amid growing speculation of a Bank of Japan intervention in the foreign exchange market, capitalizing on lower liquidity during Japan's Golden Week holidays.

As inflationary pressures on BoJ monetary policymakers recede, the likelihood of a Japanese interest rate hike in June has declined, as the market awaits more data on the developments of the world's fourth-largest economy.

Price Overview

*   Japanese Yen Exchange Rate Today: The dollar fell against the yen by about 0.7% to (156.95¥), from Friday's closing price of (157.02¥), after recording a session high of (157.25¥).

*   The yen ended Friday's trading down by approximately 0.3% against the dollar due to correction and profit-taking operations, after having hit a two-month high of 155.49 yen earlier in the session.

*   Last week, the yen achieved a gain of about 1.45% against the dollar, marking its fourth weekly rise in five weeks and its largest weekly gain since late February, driven by BoJ intervention in the exchange market.

Japanese Monetary Authorities

Officials in Tokyo have refrained from confirming whether they have actually intervened in the exchange market to support the local currency. However, sources told Reuters that Japanese monetary authorities have indeed conducted yen-buying operations for the first time in two years.

Japan's top currency diplomat, Atsushi Mimura, stated on Friday that speculation remains widespread, issuing an explicit warning that Tokyo is prepared to return to the markets just hours after intervening to support the struggling yen.

Responding to a question about the possibility of Tokyo's intervention in the currency market, Mimura told reporters: "I will not comment on what we will do in the future. But I assure you that the Golden Week holiday in Japan has only just begun."

Opinions and Analysis

*   Mahjabeen Zaman, head of FX research at ANZ Bank in Sydney, stated: "The primary focus will be on whether additional intervention will occur, especially with Japan closed for the Golden Week holiday, which leads to lower liquidity during this period."

*   Zaman added: "More importantly, is whether the United States will join Japan's efforts to support the yen. If yen weakness persists, it can be argued that the chances of bilateral intervention will increase."

Japanese Interest Rates

*   Data from last week showed that core inflation in Tokyo slowed, contrary to market expectations for April.

*   Following that data, the market pricing for the probability of the BoJ raising interest rates by a quarter-point in the June meeting fell from 75% to 65%.

*   To re-evaluate these probabilities, investors are awaiting further data on inflation, unemployment, and wage levels in Japan.

*   BoJ Governor Kazuo Ueda stated last week that there is no immediate need to raise interest rates.

*   The BoJ kept interest rates unchanged last week for the third consecutive meeting, warning of escalating inflationary pressures due to the repercussions of the war with Iran and high energy prices.

*   The vote to hold rates passed with 6 members in favor and 3 members calling for a 25-basis-point hike to the 1.0% range.

Oil prices declined on Friday after Iran sent an updated peace proposal to mediators in Pakistan, reviving hopes for a potential settlement with the United States.

U.S. crude oil futures fell by more than 3% to reach $101.57 per barrel by 2:10 p.m. ET, while global benchmark Brent crude lost about 2% to settle at $107.98 per barrel.

Pakistani officials confirmed to MS Now that mediators had received an updated proposal from Iran to end the war, noting that the document has been delivered to the United States. However, President Donald Trump later stated he was not satisfied with the Iranian offer.

"Iran wants to make a deal, but I’m not satisfied with it," Trump told reporters at the White House, adding, "Iran wants a deal because they effectively no longer have a military."

The 60-Day War Powers Deadline

President Trump is facing a 60-day deadline under the War Powers Resolution regarding military operations in the conflict with Iran. Under the 1973 law, a president must withdraw forces within 60 days of notifying Congress of their deployment unless lawmakers authorize continued military operations—which has not yet occurred.

The Trump administration argued on Friday that the ceasefire reached three weeks ago effectively "ended" hostilities, according to MS Now. This interpretation could allow the White House to avoid seeking congressional approval to continue the war.

An administration official stated that the absence of direct clashes between U.S. and Iranian forces since the ceasefire began on April 7 means the 60-day clock is no longer in effect. "For the purposes of the War Powers Resolution, the hostilities that began on Saturday, February 28, have ended," the official said.

This argument was first introduced by Defense Secretary Pete Hegseth during a House Armed Services Committee hearing on Thursday, where he stated that the ceasefire effectively halted the war.

Background and Ongoing Tensions

* Timeline: The U.S. and Israel launched strikes on Iran on February 28. Trump officially notified Congress on March 2, triggering the 60-day clock with a deadline of May 1.

* Extensions: While Trump can request a 30-day extension under the law, lawmakers indicate he has not yet done so.

* The Blockade: Despite the ceasefire, Trump escalated threats on Wednesday, vowing to maintain the U.S. naval blockade until Tehran agrees to a new nuclear deal.

* Hormuz Stalemate: Tehran has refused to reopen the Strait of Hormuz unless the U.S. lifts its blockade of Iranian ports.

While the ceasefire holds for now, Axios reported that U.S. Central Command has developed plans for "short and powerful strikes" to break the diplomatic deadlock. Conversely, a senior Revolutionary Guard official threatened "long and painful strikes" against U.S. positions if Washington resumes its attacks, according to reports from Iranian media and Reuters.

When a major oil shock occurs, most Americans first notice it at the gas pump.

This is precisely what is happening now. Since the February 28 attack on Iran and the subsequent disruption of oil tanker traffic through the Strait of Hormuz, gasoline and diesel prices in the United States have risen sharply. Food prices have also begun a gradual climb as transportation costs ripple through supply chains. The March inflation report came in significantly higher than expected.

For many Americans, the story seems to end there: higher prices, but functioning supply chains.

Globally, however, this is not just a price crisis; it is already transforming into a supply crisis.

A global choke point under pressure

The Strait of Hormuz is the world's most important energy artery. Approximately one-fifth of global oil consumption—nearly 20 million barrels per day—passes through this narrow waterway. It is also a primary route for liquefied natural gas (LNG) exports, particularly from Qatar.

When traffic through Hormuz is disrupted, the impact is immediate—not just because of the volume of flow, but due to the lack of realistic alternatives. Oil tankers cannot simply reroute without massive increases in time, cost, and logistical complexity; in some cases, they cannot reroute at all.

The result is what we are witnessing now: a sharp repricing of risk in global energy markets, followed by actual physical supply tightening.

Outside the U.S.: The impact is already more severe

The United States enjoys a degree of protection as a major oil producer with relatively limited reliance on Gulf imports. Most of the world, however, does not have this buffer.

In import-dependent economies, pressures are already surfacing.

In South and Southeast Asia, fuel shipment delays and rising import costs are affecting supply availability. About 90% of India’s LPG imports—which millions of households rely on for cooking—depend on passage through the Strait of Hormuz. The current disruption has led to an internal supply crisis, forcing the government to impose a gas rationing system for households.

Agriculture is another pressure point. The production and trade of fertilizers are closely linked to natural gas and petrochemical inputs. Roughly 30% of global fertilizer trade, and a large portion of the sulfur and ammonia used in phosphate fertilizers, passes through the Strait of Hormuz.

More than 40% of India’s fertilizer imports come from the Middle East. With the agricultural monsoon season approaching, farmers in regions like Punjab and Haryana have rushed to buy out of fear of shortages. If fertilizer supplies do not stabilize by May, the International Energy Agency (IEA) warns of a direct threat to crop yields.

Europe: A different but real fragility

Europe’s fragility looks different but is no less dangerous. While it has reduced its reliance on Russian oil since 2022, it remains dependent on global markets for refined products. Previously, about half of Europe’s jet fuel imports came from the Middle East.

The IEA has warned that Europe could face a severe jet fuel shortage by June. Several airlines have already begun prioritizing international flights over domestic and regional routes to conserve dwindling stockpiles.

East Asia: The problem of scale and dependence

In Northeast Asia, the problem lies in scale and dependence. Data confirms that Japan receives about 11% and South Korea about 12% of the total oil shipments passing through the Strait of Hormuz. Reliance on Gulf oil and gas remains extremely high in both countries.

Companies there have moved to secure alternative sources and utilize reserves, but these measures are costly and reveal the limited alternatives available in the global system.

The crisis spreads to manufacturing

In the next stages of the value chain, effects extend to the manufacturing sector. Prices for petrochemical materials derived from oil and gas are rising, squeezing industries such as plastics and textiles.

In export-oriented economies, this leads to production slowdowns, compressed profit margins, and higher costs for global buyers.

In developing economies, the risks are even more acute. Many lack the fiscal flexibility, reserves, or infrastructure needed to absorb prolonged disruptions. Rapidly increasing energy costs can quickly lead to currency pressure, declining industrial output, and, in some cases, actual commodity shortages.

Why has the U.S. survived so far?

The relative stability in the U.S. stems from two factors: production and geography.

Domestic oil production remains near record levels, and U.S. reliance on Gulf imports is lower than many other nations, providing a buffer against physical supply disruptions. Furthermore, the U.S. possesses one of the world's most complex and sophisticated refining systems, allowing it to meet a large portion of domestic demand for gasoline and diesel.

However, a "buffer" does not mean "immunity."

Oil is priced globally. When a disruption pulls—or even threatens to pull—millions of barrels per day from the market, prices rise worldwide. This is why U.S. consumers are already seeing higher fuel prices. Notably, diesel prices are rising faster than gasoline for structural reasons; diesel is the backbone of shipping, transportation, agriculture, and industry, and its supply is often more limited. When diesel moves, the entire economy follows.

The next phase has not yet begun

What the U.S. is experiencing now—rising fuel prices and the onset of inflation—is typically the first stage of a supply shock.

Globally, the second stage has already begun: supply tightening and operational disruption.

As the crisis persists, the next stage becomes harder to avoid. Refineries may begin scaling back production as margins decline and crude becomes harder to source. Petroleum product markets will tighten further. Strategic reserves can help, but they are only a temporary fix.

Ultimately, the system adjusts through what is known as "demand destruction," where high prices force consumers and businesses to cut consumption, leading to a slowdown in economic activity. This eventually lowers prices, but at a clear economic cost.

The Big Picture

It is easy to view the current situation through a domestic lens: higher gas prices, extra pressure on food costs, and a general sense of rising expenses.

But this perspective ignores the broader reality.

In many parts of the world, this is no longer just an inflation crisis; it has become a supply chain disruption affecting fuel, food production, manufacturing, and transport.

The United States has been more insulated so far, but history suggests this rarely lasts. Additional repercussions are likely to emerge later. Energy shocks are rarely contained within a single border; they transmit through global trade, pricing, and supply chains before manifesting more clearly within domestic economies.

What Americans are experiencing today is only the early stage, while the rest of the world is living through much more advanced phases of the crisis.