The euro hovered near $1.14, close to its lowest level in a year, as investors awaited Thursday’s European Central Bank policy decision and tracked mounting tensions in the Middle East. The ECB is widely expected to keep interest rates on hold after June’s increase, adopting a cautious approach while policymakers evaluate incoming economic data and geopolitical risks.
Despite this likely pause, markets are still pricing in roughly two additional rate hikes by year-end, with the next move potentially in September. At the same time, persistent worries that rising Middle East tensions could disrupt global oil supplies are bolstering expectations that inflationary pressures in the euro area may stay elevated. Brent crude rose to its highest level in more than a month after President Donald Trump ruled out imminent talks with Iran, threatened further strikes, and vowed to retaliate if Iran-backed Houthi rebels in Yemen interfere with shipping in the Red Sea.
