The Euro is increasingly under pressure due to the escalating crisis in Iran, prompting Nigel Green, CEO of the financial advisory firm deVere Group, to warn investors to take action.
According to Green, fresh geopolitical tensions in the Middle East are rapidly affecting global markets, with currencies being among the first assets to respond.
On Friday, the euro fell to its weakest level in over seven months against the US dollar, as investors flocked to the greenback and energy prices surged above $100 a barrel.
The situation is particularly precarious for Europe, which is heavily reliant on imported energy, making its economy and currency particularly sensitive to oil and gas price shocks caused by geopolitical conflicts.
Green states, “The pressure on the euro reveals a deeper structural vulnerability that investors cannot afford to overlook. The single currency is entering a danger zone because the geopolitical crisis hits directly at Europe’s most significant economic weakness—energy dependence.”
He explains that markets are reacting swiftly as they recognise the implications. Higher oil prices immediately increase Europe’s import costs, weaken the trade balance, and undermine the currency.
Europe imports roughly 95% of the oil it consumes and more than half of its overall energy supply. Consequently, a sustained surge in energy costs impacts the eurozone more severely than many other major economies.
Green argues that currency markets are already factoring in this risk. Every escalation in the Middle East leads to higher energy prices, and every increase in those prices intensifies pressure on the euro,” he notes.
“Investors are gravitating toward the dollar because the US is much less vulnerable to shocks from imported energy. This structural difference is crucial in moments like this.”
The euro has declined over 2% against the dollar this year, and the recent drop reflects growing investor apprehension that the eurozone economy may weaken further if energy prices remain high.
Industrial output in parts of the eurozone has already begun to slow, while manufacturing sectors in energy-intensive economies like Germany continue to struggle following the previous energy crisis.
Green warns that if the conflict escalates, currency weakness could accelerate further. “Energy costs permeate every level of the economy. They squeeze businesses, erode consumer purchasing power, and simultaneously push inflation higher.
This combination creates the perfect storm for a currency already facing structural challenges.
He adds that markets will likely react quickly if oil prices continue to rise. If crude prices stay above $100 or increase significantly, investors should anticipate renewed downward pressure on the euro.
The market understands that Europe’s growth outlook deteriorates rapidly in an energy shock scenario.
Green believes waiting for stability may come at a cost. Currency markets react faster than economic data. By the time the full economic damage becomes apparent, the euro could have already significantly declined.”
“Investors who remain overexposed to euro-denominated assets risk seeing the value of their portfolios eroded due to currency depreciation alone.”
He concludes, “This is the time to reassess currency exposure urgently. The euro is being tested by forces that extend far beyond daily market fluctuations.
“Investors who recognise the scale of the risk and adjust their positioning accordingly will likely be better prepared for what could be an extended period of currency instability.”
