Euro stays just above $1.165 near three-month highs
The euro holds just above $1.165 in the final full week of August, sustaining its highest level since mid-May as ECB rate-hike expectations and geopolitical energy risks persist.
The euro held just above $1.165 in the final full week of August, sustaining its highest level since mid-May, as investors braced for a more hawkish European Central Bank amid geopolitical tensions complicating its inflation battle.
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 Eurozone gas inventories, and a prolonged conflict that could extend beyond the US midterm elections in November.
A September rate hike would bring the deposit rate to 2.5%, but expectations for further tightening are growing.
Markets now price a roughly 25% chance of the deposit rate reaching 3% by March 2027 and about a 60% chance by September.