The euro climbed back above $1.12 after touching a 17‑month low of $1.1161 earlier in the week, supported by a stabilization in French bond markets and a pullback in energy prices and US Treasury yields, which together took some momentum out of the dollar’s rally. Even so, the single currency remained on course for a fifth straight weekly loss, down about 3% against the dollar over that stretch, as investors weighed France’s record-high debt levels and the political hurdles to implementing fiscal consolidation against a resilient US economy and a stronger greenback.
At the same time, Brent crude eased from its recent highs after US President Donald Trump said Washington would not launch an attack on Iran before the November midterm congressional elections, pointing to productive talks aimed at resolving the conflict. The pullback in oil prices led traders to temper expectations for further central bank tightening, with markets now pricing the ECB’s deposit rate to rise from 2.50% currently to around 2.72% by December and 3.20% by late 2027.
