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US President Donald Trump has threatened consequences for Iran if the Houthi rebels in Yemen retaliate to a campaign of US airstrikes that started on Saturday. US officials have warned that the strikes will continue until the group ceases military action against Red Sea shipping. 

• Trump said on Truth Social: "Let nobody be fooled! The hundreds of attacks being made by Houthi,... all emanate from, and are created by, IRAN. Any further attack or retaliation by the “Houthis” will be met with great force, and there is no guarantee that that force will stop there."
• Trump continued: "[Iran is] dictating every move, giving them the weapons, supplying them with money and highly sophisticated Military equipment, and ... “Intelligence.” Every shot fired by the Houthis will be looked upon, from this point forward, as being a shot fired from the weapons and leadership of IRAN, and IRAN will be held responsible, and suffer the consequences..."
• The recent US escalation, which has included strikes on Houthi leadership rather than limited strikes on military targets, has again brought Red Sea shipping to the fore, which traditionally carries around 12% of global shipping. Houthi attacks, ostensibly in solidarity with Palestine, are likely to stop if Israel and Hamas agree to the implementation of Phase 2 of the Gaza ceasefire agreement.
• A US official told Reuters that strikes could continue for weeks as Washington ramps up pressure on Iran while trying to bring Tehran to the negotiating table over its nuclear program.

In the following publication, we provide a summary of ECB-speak between March 11 and March 17: 250317 - Weekly ECB Speak Wrap.pdf

In our view, the most notable Governing Council commentary since March 11 has come from Vice President De Guindos, following dovish leaning interviews with The Sunday Times Ireland and Onda Cero on 16/17 March. De Guindos continued to express conference in the inflation outlook, as “all indicators for services and underlying inflation are moving in the right direction”. Meanwhile, he noted that US tariffs would “have a much worse impact on growth than on inflation” and that current evidence suggests “consumption is not picking up”.

• While no explicit policy signals were provided by de Guindos, his comments suggest he will still support several more cuts even amid the current prospects for increased German/EU defence spending. We consider de Guindos to be a dovish leaning centrist, so his stance is likely to be mirrored by several other Governing Council members.
• In that vein, Simkus on March 12 suggested the direction of travel for rates is still “clear”, while Villeroy said on March 14 that victory against inflation will be assured “very very soon in Europe”.  
• In an interview with Der Platow, the hawkish Holzmann provided his first comments since abstaining at the March meeting. He noted that the abstention was “primarily due to the accompanying communication” in the policy statement, as he views ECB policy to already be at neutral levels. Meanwhile, he noted that he is in favour of a “possible interest rate pause in April”.
• Speaking to the BBC on March 13, Bundesbank President Nagel seemingly pushed back his timeline for the sustainably return to the 2% target. He noted that the Eurozone will be “back to our target at the end of this year”, later than the mid-2025 timeframe he had previously been signalling for.
• ECB President Lagarde speaks at an EU Parliamentary hearing on Thursday, but a more detailed discussion of current policy may be provided at tomorrow’s MNI Connect event with Bank of Finland Governor Rehn – sign up here:
• ECB-dated OIS price 47bps of easing through year-end, with 31bps of cuts priced through June. With Germany’s fiscal package seeming likely to be passed this week, regional focus turns to the flash PMI and inflation data due over the next few weeks, alongside any tariff-related developments. 

In tandem with the slip to new daily lows for the US 10yr yield, the greenback is extending weakness in recent trade - putting EUR/USD, GBP/USD at fresh daily highs. We noted markets taking out soft resistance into 1.0912 earlier today, and this exposes the bull trigger at 1.0947, the next major upside level for the pair.

• Higher oil prices, lower yields are certainly weighing on the USD here - in turn triggered by Trump's more aggressive language on Iran - adding an additional geopolitical premium to the latest turn against the greenback.
• Despite a generally quieter session in terms of headlines, volumes have been very healthy - contrasting with this point last week. EUR futures have traded close to 70% more in volumes relative to the average for this time of day - making for a busy start to the week.