Mitsubishi UFJ: Prospects of European Central Bank raising interest rates have cushioned the impact of Iran war on the Euro.

Derek Halpenny of Mitsubishi UFJ Financial Group stated in a report that signals from the European Central Bank of a possible interest rate hike may be offsetting the impact of the Iran war on the euro. ECB President Christine Lagarde said on Wednesday that the ECB is not "hesitating to act", and if the war leads to an increase in energy prices pushing inflation above target levels, the ECB may raise interest rates. Halpenny suggests that this may be weakening the negative impact of unfavorable trade conditions on the euro. However, if broader risk aversion increases and global stock markets decline significantly due to risks of a global economic recession, the impact of relative interest rates will be greatly reduced, and the euro may weaken against the safe-haven currency, the US dollar. The euro is trading steadily at 1.1562 dollars.