The euro weakened to 1.1580 against the strengthening dollar ahead of the Federal Reserve's expected rate hold at 3.50%-3.75%, while the ECB signaled readiness for further tightening if inflation pressures persist.
Three ECB policymakers warned Thursday that prolonged Iran-U.S. conflict risks pushing euro zone inflation above its 2% target and weakening growth, citing lessons from Russia's 2022 Ukraine invasion that initially caught the central bank off-guard.
EUR/USD strengthened above 1.1710 as Trump extended a US-Iran ceasefire, reducing conflict fears and boosting risk appetite, while the ECB signals unchanged April rates with potential June-September hikes ahead.
EUR/USD strengthened to 1.1662 as easing US-Iran tensions reduced safe-haven dollar demand, while lower oil prices supported the euro by easing eurozone inflationary pressures amid ongoing geopolitical uncertainty.
EUR/USD traded above 1.1725 Tuesday as markets awaited Fed and ECB rate decisions amid US-Iran tensions over the Strait of Hormuz closure, with geopolitical uncertainty potentially supporting the dollar and limiting euro gains.
The dollar recovered to a one-week high as US-Iran tensions over the Strait of Hormuz boosted safe-haven demand, while the euro weakened on Eurozone consumer confidence declining to a 3.25-year low and Germany cutting its 2026 GDP forecast.
ECB Governor Kazaks signaled gradual rate adjustments following the central bank's first 25 basis point hike in June 2026, citing rising inflationary pressures from Middle East conflict impacts on commodity markets and upward-revised inflation projections.
EUR/GBP steadies near 0.8660 as traders await BoE and ECB rate decisions Thursday, with both central banks expected to hold rates amid Middle East uncertainty and concerns about energy price impacts on UK economy growth.
ECB policymakers, including Philip Lane and François Villeroy de Galhau, downplayed April rate hike prospects, emphasizing data dependency over timing as markets scaled back hike bets to just twenty percent probability.