Euro slips below $1.165 as ECB and Fed policy focus turns
The euro edged below $1.165, retreating from near three-month highs. Moves reflect assessment of oil-price pause, ECB rate outlook, and attention on Fed Chair Kevin Warsh’s Jackson Hole speech.
The euro edged below $1.165, retreating from the near three-month highs reached last week, as investors assessed the pause in the recent oil price decline and the outlook for ECB interest rates.
Attention is also turning to Federal Reserve Chair Kevin Warsh's speech on Friday at the annual Jackson Hole gathering for further clues on the Fed's policy path.
Meanwhile, prospects for an agreement to reopen the Strait of Hormuz remain uncertain amid conflicting signals from Iran.
Qatar's prime minister is due to visit Tehran on Thursday to revive US-Iran diplomacy, with the two sides still divided over control of the key waterway.
In money markets, traders are pricing about 40 bps of additional ECB tightening by year-end, with a September rate hike almost fully priced in.
ECB policymakers said they are prepared to raise rates at their September meeting to contain the economic fallout from the Iran war, although they remain reluctant to signal further tightening beyond that.