FX.co ★ Euro Holds Near One-Month High as ECB Tightening Bets Support

The euro was little changed around $1.145, holding near its strongest level since June 19 and remaining on track for a weekly gain against the US dollar. The currency continued to be supported by expectations of further tightening by the European Central Bank, while investors also monitored rising tensions in the Middle East following additional US strikes on Iranian targets. Markets have fully priced in an ECB rate hike in September, with another increase anticipated by spring 2027. Still, recent remarks from policymakers, including Piero Cipollone and Martin Kocher, signaled a more cautious stance, making a July move unlikely. At the same time, the dollar weakened over the week after softer-than-expected US inflation data, as producer prices unexpectedly declined in June and consumer prices recorded their first monthly drop since 2020, dampening expectations for further Federal Reserve tightening this year.