Iran Update - Tension Arises

An increased number of market players continue to think there is a "real possibility" of a US strike on Iran in coming months.

Last week, in the wake of comments by Vice President Dick Cheney saying "all options are still on the table", the market began to again consider the prospects of US military action against Iran.

A report in the Asian Times Tuesday asserts that barring an "unexpected turnabout by Tehran", President Bush is likely to announce a strike at military targets inside Iran.

The report offers "three US reasons to attack Iran." In the run-up to the start of the Iraq War, the dollar came under fierce downward pressure and then rebounded into the event.

The euro closed around $1.0500 on Dec 31, 2002 Fell to $1.0330 Jan 2, 2003 and then rose to $1.1084 on March 11. The pair closed at $1.0556 on March 19, 2003 - the day US led coalition forces invaded Iraq.