A broadly softer Dollar lifts the Euro and Pound toward one-year highs on ECB and BoE hike bets, even as the same Middle East energy shock that is stoking inflation fears drags Silver lower, pushes Wheat higher, keeps the DAX and Eurozone yields under pressure, and leaves crypto as the session’s most conspicuous bright spot.

Thursday’s European session opened with the Dollar on the back foot across the board, a trend that has been building since Tuesday’s US Consumer Price Index showed headline inflation cooling to 3.5% year-on-year and posting its first monthly decline since 2020. EUR/USD has climbed to around 1.1481, its strongest level in roughly a year, as markets now fully price a European Central Bank rate increase in September and anticipate a deposit rate near 2.70% by December, up from the current 2.25%, even as ECB policymakers including Piero Cipollone and Martin Kocher have struck a more cautious tone, arguing there is no clear evidence yet of second-round inflation effects. GBP/USD has extended its own advance to near 1.3540, its highest level since mid-June and within striking distance of a one-year peak against the Euro, as Bank of England rate-hike expectations firm and as domestic political uncertainty recedes ahead of Monday’s expected confirmation of Andy Burnham as the UK’s next prime minister, with attention now shifting to his choice of chancellor.

That same Dollar softness has done little for precious metals, which remain caught in the crosswinds of the deepening US-Iran conflict. Silver has fallen more than 1% to trade near $57.00 an ounce, unable to sustain Tuesday’s brief rebound above $60, as renewed US strikes on Iranian targets and President Trump’s threat to widen the campaign against Iranian infrastructure keep energy prices elevated and inflation expectations de-anchored to the upside — a backdrop that favours continued central-bank tightening over the rate cuts that would typically support a non-yielding asset like Silver. Wheat is telling a different story, extending Wednesday’s near 3% advance to trade above 665 cents a bushel on the Chicago Board of Trade after the USDA reported June 1 stocks below expectations and a reduced acreage forecast, with the Iran-linked threat to Strait of Hormuz shipping adding a fresh layer of supply anxiety on top of already-firm export demand, including a private sale of US hard red spring wheat to Nigeria.

European equities are under modest pressure, with the DAX 40 slipping around 0.2% to near 24,946 points, building on Wednesday’s roughly 0.6% decline as chemical and technology names including Infineon, BASF and Bayer underperform on renewed Middle East risk aversion, while automakers such as Volkswagen, BMW and HeidelbergCement have held up comparatively well. Eurozone government bond yields are pushing toward their highest levels since May, with the German 10-year Bund near 3.1% and the two-year note near 2.8%, its highest since July 2024; the 5-year note yield is estimated near 2.95%, reflecting the same ECB tightening bets that are supporting the Euro even as they weigh on risk appetite in equities. In digital assets, the tone is considerably brighter: Ethereum has reclaimed the $1,900 level to trade near $1,920, up more than 3% on the day amid improving institutional and staking-related demand, while Solana holds near $77.50, up around 1.5%, as broader crypto markets track Bitcoin’s push back above the $65,000 mark following this week’s cooler US inflation data. The remainder of the session hinges on US Retail Sales, Initial Jobless Claims and the Philadelphia Fed Manufacturing Index, all due at 14:30 CET, together with any further escalation in the US-Iran standoff.