The euro was little changed around $1.15, hovering near its lowest level in more than two months as broad dollar strength continued to pressure the common currency. The greenback remained supported by ongoing tensions in the Middle East, where repeated military strikes and diplomatic setbacks have dimmed hopes for a resolution between the US and Iran.
Investors are now focused on the ECB’s upcoming monetary policy decision, with the central bank widely expected to raise interest rates by 25bps, its first hike since 2023. This move would lift the deposit facility rate to 2.25%. The anticipated increase comes as inflationary pressures intensify in the wake of the energy shock triggered by the conflict with Iran, and the ECB’s updated projections are likely to signal further inflation acceleration in the months ahead.
Market participants will also closely examine the ECB’s forward guidance, amid expectations that policymakers could deliver at least one additional rate hike before the end of the year.
