Euro Rebounds Amid ECB Rate Hike Speculation

2026-03-20 08:55 By Joana Ferreira 1 min. read

The euro bounced back to $1.16 at the end of a volatile week, recovering from an over seven-month low, after the European Central Bank signaled a more aggressive stance on inflation, fueled by surging oil and gas prices tied to the Iran conflict.

On Thursday, the ECB held interest rates steady but revised its inflation forecast upward while lowering growth projections for the coming years, citing heightened uncertainty from the Middle East conflict.

The central bank’s stance has led major financial institutions to anticipate an interest rate hike as early as April, with markets now fully pricing in a rise by June and assigning a 60% probability to a move in May.

ECB policymaker Joachim Nagel emphasized the possibility of a rate increase next month if price pressures continue to build, while Francois Villeroy de Galhau reaffirmed the bank’s commitment to act decisively.



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