FX.co ★ Euro Slips to Fresh 15-Month Lows

The euro began October on a weaker footing, slipping toward $1.13—its lowest level since May 2025—after losing more than 2% against the dollar in September, the steepest monthly drop in 14 months. Markets increasingly expect the ECB to tighten policy more slowly than the Federal Reserve, with additional ECB rate hikes still priced in over the coming year and the next move potentially scheduled for December, when updated economic projections are due.

At the same time, inflation picked up across several major European economies in September, driven largely by higher fuel costs. ECB Executive Board member Isabel Schnabel said on Wednesday that the next few months will be crucial for assessing the energy shock and determining how far interest rates will ultimately need to rise, indicating that even one of the central bank’s most hawkish voices is adopting a wait‑and‑see stance as the US‑Iran war enters its eighth month.

A subdued growth outlook may further limit the ECB’s scope for aggressive tightening, while political uncertainty ahead of elections in France, Spain, and Italy next year is also weighing on investor sentiment.