Oil Surges on Iran Crisis as European PMIs Signal Growth; FX Volatility Spikes

Crude oil prices have surged sharply as Middle East conflict intensified dramatically, with the Kuwaiti Army reporting engagement with a massive wave of missiles and drones in its airspace amid preparations for Iran's Khamenei funeral. The energy shock is reverberating across forex markets, with commodity-linked currencies experiencing heightened volatility. European PMI data provided a counterbalance for the euro, with manufacturing and services surveys showing unexpected growth momentum across the eurozone. The divergence between deteriorating geopolitical conditions and improving European economic fundamentals is creating a complex trading environment. Oil-importing nations' currencies face headwinds from rising energy costs, while oil exporters like Canada see potential support for CAD. The US Dollar Index is under pressure as markets reassess growth trajectories amid energy price disruptions. EUR/USD continues to benefit from the dual tailwinds of European economic resilience and dollar weakness. Traders should prepare for elevated volatility and wider spreads as geopolitical developments remain fluid and unpredictable.