The euro held steady just above $1.14 as attention turned to the European Central Bank’s policy meeting on Thursday. Following June’s rate hike—its first in three years—policymakers are widely expected to keep interest rates unchanged and maintain a cautious tone. Even so, markets are still pricing in two additional ECB rate increases by early 2027, largely in response to rising crude prices, with the first move potentially coming in September.
At the same time, investors are monitoring the prospect of renewed US–Iran peace talks after recent escalations. Persistent tensions in the Middle East have heightened fears of disruptions to oil supplies, a risk that could fuel inflationary pressures in Europe, a net energy importer, and in turn drive bond yields higher.
