FX.co ★ Euro Recovers as ECB Rate Hike Expectations Grow

The euro inched up to $1.143, attempting to recover from the one-year lows reached in June, as expectations strengthened for another European Central Bank interest rate hike in September. On Wednesday, Brent crude hit a two-week high following renewed US–Iran strikes, after US President Trump declared the Iran ceasefire over. He also stressed that Iran still wants to strike a deal “badly,” keeping alive hopes for a return to negotiations. Markets are now pricing in more than 30 basis points of additional ECB tightening this year, implying at least one further increase in rates. On the political front, Germany’s cabinet approved a draft 2027 budget envisaging €555.4 billion in spending and raising planned borrowing to €203.6 billion, higher than earlier projections. In France, far-right leader Marine Le Pen confirmed she will run in the 2027 presidential election, with polls currently favoring her National Rally party, while uncertainty remains over who will succeed President Macron.