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Eurosceptic ECB Executive Board member Robert Holzmann warned that a prolonged conflict in Iran could exacerbate inflationary pressures by disrupting global oil supplies. Speaking at a European Parliament hearing, Holzmann highlighted that sustained geopolitical tensions in the Persian Gulf may lead to higher energy prices, which would ripple through economies and weaken the euro. His comments come amid growing concerns over Middle East instability and its potential to destabilize global markets. The warning is critical for forex traders as energy price volatility directly impacts inflation expectations and central bank policy decisions. A prolonged Iran war could force the ECB to delay rate cuts, while also increasing pressure on oil-linked currencies like the Canadian and Norwegian kroner. For European investors, the scenario poses risks to import-dependent economies and may accelerate inflation in the Eurozone. Markets should closely monitor developments in the Strait of Hormuz, where 20% of global oil flows pass through. The ECB's upcoming inflation forecasts and the European Council's geopolitical strategy will be key indicators. Traders should also watch the EUR/USD pair for signs of weakness against the dollar amid energy-driven inflation fears.
