European Central Bank policymaker Fabio Panetta warned that upside risks to Eurozone inflation persist due to ongoing uncertainty surrounding the governance of the Strait of Hormuz, a vital energy chokepoint.

Panetta noted that supply shocks are becoming more frequent, contributing to a fragile economic outlook with both upside inflation and downside growth risks. This situation limits the ECB's room for aggressive monetary easing, leaving the Euro zone vulnerable to further price pressures even as economic activity softens.

The remarks, while signaling a modestly hawkish tone, did not significantly move the Euro, which traded near 1.1427 against the US dollar at press time. The focus on geopolitical and energy-related disruptions underscores the persistent sensitivity of the Euro to external shocks.