FX.co ★ Euro Under Pressure on ECB Signals, New Tariffs

The euro held below $1.14 as investors weighed the ECB’s latest policy decision, new US tariffs, and rising geopolitical tensions in the Middle East. As expected, the ECB left interest rates unchanged but delivered a strong signal that a rate hike in September is increasingly likely. Surging energy prices—driven by oil approaching $100 per barrel and a spike in natural gas linked to the US-Iran conflict—have intensified inflation worries and bolstered expectations that the ECB will resume tightening after the summer, when updated economic projections are due. Several ECB officials, including Bundesbank President Joachim Nagel, cautioned that inflation risks remain elevated and that further rate increases may be required. At the same time, the US announced new tariffs on imports from 60 trading partners, including the EU. The European Commission gave the move a guarded endorsement, noting that the measures are broadly in line with the tariff commitments set out in the EU-US Joint Statement.