Euro holds above $1.165 on hawkish ECB, Iran sanctions watch
The euro stays above $1.165 in the final full week of August, its strongest since mid-May, while markets weigh expectations for a more hawkish ECB and details on Iran sanctions.
The euro held above $1.165 in the final full week of August, its strongest since mid-May, as investors anticipate a more hawkish ECB amid geopolitical tensions and await details on Iran sanctions.
The ECB is widely expected to raise interest rates in September, following its June tightening to curb inflation pressures triggered by the US-Iran conflict and its impact on energy prices.
Oil remains above $90 per barrel, with risks of further supply constraints for refined fuels, low gas inventories, and a prolonged conflict that could extend beyond November's US midterm elections.
A September hike would lift the deposit rate to 2.5%, but bets on further tightening are rising.
Markets see a 25% chance of 3% by March 2027 and 60% by September.
Meanwhile, US Treasury Secretary Scott Bessent will hold a press conference after threatening "the toughest sanctions in history" on Iran, with markets watching for potential China targets.
Iran’s foreign minister dismissed the sanctions as desperate.