FX.co ★ Euro Down to 3-Week Low

The euro slipped below $1.17 to a three-week low, pressured by a stronger dollar after a more hawkish-than-expected Federal Reserve policy decision. At the same time, rising oil prices weighed on the single currency and bolstered safe-haven demand for the greenback. The Fed left the federal funds rate unchanged, as anticipated, but the vote was not unanimous: three policymakers dissented over guidance that left the door open to resuming rate cuts at a later stage.

In contrast, the European Central Bank is expected to keep interest rates on hold at its meeting on Thursday. Nonetheless, markets are fully pricing in three 25-basis-point rate increases in 2026, reflecting persistent inflationary pressures linked to the oil shock triggered by the conflict with Iran.

Fresh data from Germany showed EU-harmonised inflation rising for a second consecutive month to 2.9%, the highest reading since January 2024. In Spain, the harmonised rate also quickened, reaching 3.5%, its highest level since June 2024.