Euro Ends September Under Pressure
The euro ended September near $1.135, close to its lowest level since May 2025, after falling more than 2% against the US dollar over the month, as markets expected the ECB to lag the Fed in tightening. Markets are pricing in further ECB rate increases over the coming year, with the next move potentially coming in December alongside the ECB’s updated economic projections, while expectations for another Federal Reserve hike have remained elevated, although recent comments from New York Fed President John Williams have tempered bets on an October move. Inflation in France and Spain accelerated more than expected in September, although ECB President Christine Lagarde said the recent surge had yet to generate significant second-round effects, pointing to a measured policy response. Weak eurozone growth, seen at just 0.9% this year, could also limit aggressive tightening, while political uncertainty ahead of elections in France, Spain and Italy next year continued to weigh on the currency.
135, close to its lowest level since May 2025, after falling more than 2% against the US dollar over the month, as markets expected the ECB to lag the Fed in tightening. Markets are pricing in further ECB rate increases over the coming year, with the next move potentially coming in December alongside the ECB’s updated economic projections, while expectations for another Federal Reserve hike have remained elevated, although recent comments from New York Fed President John Williams have tempered bets on an October move.
Inflation in France and Spain accelerated more than expected in September, although ECB President Christine Lagarde said the recent surge had yet to generate significant second-round effects, pointing to a measured policy response. 9% this year, could also limit aggressive tightening, while political uncertainty ahead of elections in France, Spain and Italy next year continued to weigh on the currency.