Euro Nears Two-Month Low
The euro weakened to $1.145, its lowest level since late July, as investors assessed developments in the Middle East while the USD remained supported by expectations of further Federal Reserve rate hikes. Brent crude resumed its decline after reports that Iran had offered to reopen the Strait of Hormuz within seven days if Washington lifts its military blockade of Iranian ports. Meanwhile, ECB’s Chief Economist Philip Lane warned that a new wave of higher energy prices could keep Eurozone inflation elevated for longer than policymakers initially anticipated. He said the shock should result in higher and more persistent inflation before a decline toward the ECB’s target from mid-2027. Following this month’s second rate hike since the Iran war sent energy costs soaring, ECB officials have begun laying the groundwork for further tightening. Eurozone inflation is expected to reach around 4% in coming months, with the ECB projecting 3% this year and 2.5% next year, well above its 2% target.
145, its lowest level since late July, as investors assessed developments in the Middle East while the USD remained supported by expectations of further Federal Reserve rate hikes. Brent crude resumed its decline after reports that Iran had offered to reopen the Strait of Hormuz within seven days if Washington lifts its military blockade of Iranian ports. Meanwhile, ECB’s Chief Economist Philip Lane warned that a new wave of higher energy prices could keep Eurozone inflation elevated for longer than policymakers initially anticipated. He said the shock should result in higher and more persistent inflation before a decline toward the ECB’s target from mid-2027.
Following this month’s second rate hike since the Iran war sent energy costs soaring, ECB officials have begun laying the groundwork for further tightening. 5% next year, well above its 2% target.