The euro rose back above $1.12, rebounding from 17-month lows, as renewed declines in oil prices and uncertainty ahead of Tuesday’s US midterm elections pressured the US dollar. This recovery occurred despite ongoing worries about France’s fiscal outlook, following Fitch Ratings’ unexpected decision last week to revise the country’s outlook to negative.
Oil prices retreated after reports indicated that US President Donald Trump was prepared to allow more time for diplomatic efforts with Iran before considering a resumption of military strikes after Tuesday’s midterm elections, which could alter the balance of power in Congress.
Meanwhile, the ECB left interest rates unchanged on Thursday and provided limited guidance on its future policy direction. President Christine Lagarde noted that a rate hike had been discussed, but policymakers unanimously decided to keep borrowing costs on hold, pointing to tighter financial conditions as a factor helping to restrain inflationary pressures.
