Euro steady above $1.16 as AfD win and ECB hike loom
The euro held just above $1.16 as investors assessed AfD’s Saxony-Anhalt result and looked to the ECB’s meeting later this week. Traders also weighed higher oil prices amid US-Iran tanker incidents and Iran’s restricted-zone threat.
16 as investors weighed the far-right AfD’s victory in Saxony-Anhalt and awaited the European Central Bank’s policy meeting later this week, with higher oil prices also feeding inflation concerns. The AfD won 44% of the vote, short of an overall majority, in a result that dealt a major blow to Chancellor Friedrich Merz’s conservatives. Brent crude moved closer to seven-week highs after the US struck three Iranian oil tankers over the weekend, destroying one, while Tehran threatened to set up a new restricted zone outside the Strait of Hormuz.
The ECB is expected to raise interest rates on Thursday, taking a cautious approach as the US-Iran war drags on and keeps oil prices elevated, reviving inflationary pressures. Traders are also pricing in about a 90% probability of a second rate hike by the end of the year.