The euro held steady around $1.155, near its weakest level in a month, as the US dollar stayed firm ahead of today’s Federal Reserve decision. US policymakers are widely expected to raise interest rates by 25 basis points, the first hike in three years, with markets also seeking guidance on the likelihood and pace of additional tightening.
At the same time, investors have stepped up bets on further European Central Bank rate increases amid renewed inflation concerns. Markets now see the ECB deposit rate at about 2.9% by December, up from the current 2.5%. Looking further ahead, the rate is projected to reach 3.4% by November 2027, fully pricing in a third hike and suggesting roughly a 50% chance of a fourth.
The ECB raised rates last week for the second time this year to counter an energy-driven surge in inflation and cautioned that price pressures may remain persistent, reinforcing expectations of continued tightening.
