Softer US inflation weakened the dollar and reduced expectations of near-term Fed tightening, supporting the euro, yen and offshore yuan. 

Fed Chair Kevin Warsh rejected criticism over his ties to President Trump and defended the Fed's new internal task forces, describing himself as "an independent guy for an independent job."

The US launched fresh airstrikes on Iran and confirmed a naval blockade on Iranian ports and coastal areas, effective 11:00 PM local time (4:00 PM ET), as part of efforts to reduce threats to shipping through the Strait of Hormuz.

Iranian Foreign Minister Abbas Araghchi mocked President Trump's proposed 20% transit fee for cargo passing through the Strait of Hormuz.

Euro remains weak against the dollar, hovering near low levels as intensifying geopolitical conflict fuels safe-haven demand for the dollar. Anticipating heightened volatility surrounding ongoing U.S.–Iran frictions and approaching CPI metrics, the euro remains constrained by divergent central bank policies while technical sellers retain near-term control.

The euro stabilized and held onto its previous gains as investors weighed the possibility of a September ECB interest rate hike against cooling Eurozone inflation data. However, the currency faced persistent overhead pressure from defensive safe-haven dollar demand, which was driven by Donald Trump ending the Iran ceasefire, hawkish Federal Reserve commentary, and elevated global crude oil prices.

The euro consolidated near a one-year low as rising energy costs stoked structural inflation worries and fueled expectations for additional ECB tightening, which in turn darkened the region's broader economic growth outlook.

The euro stabilized as oil prices climbed following attacks in the Strait of Hormuz, stoking structural inflation worries. While hawkish ECB comments regarding Middle East supply disruptions raised near-term rate expectations, soft regional data and Christine Lagarde's tempered stance capped currency gains.