EUR/USD weakened in New York trading on the 1st as reports of U.S. military strikes on Iranian targets around the Strait of Hormuz sent WTI crude oil futures nearly 5% above the previous day's close. Higher oil prices revived inflation concerns and pushed U.S. long-term interest rates higher, supporting the dollar as equity markets softened. EUR/USD stood at $1.1586 at 2:00 a.m., down about $0.0011 from $1.1597 at midnight, after touching an intraday low of $1.1585. Dollar-yen remained firm at 160.16 yen, up about 9 sen from 160.07 yen at midnight, while EUR/JPY fell about 7 sen to 185.56 yen from 185.63 yen. Although U.S. Treasury Secretary Bessent's stance was interpreted as a warning against yen depreciation, the rise in U.S. rates supported the dollar and lifted dollar-yen to 160.18 yen. In Tokyo trading, dollar-yen initially slipped to around 159.70 yen before recovering to 159.84 yen. Market participants increasingly see Middle East developments and oil prices as key near-term currency drivers. A prolonged military action around the Strait of Hormuz could intensify concerns about crude supply and inflation, while stronger risk aversion could instead prompt yen buying.