Euro Nears Three-Week High on ECB Hike Expectations

2026-05-08 07:57 By Joana Ferreira 1 min. read

The euro traded above $1.17, approaching its strongest level since April 20, as markets turned more hawkish on the European Central Bank’s policy outlook amid renewed inflation concerns.

Brent crude oil prices rose back above $100 per barrel after clashes between the US and Iran near the Strait of Hormuz, raising fears of further instability in the region’s fragile ceasefire.

Meanwhile, US President Donald Trump warned the European Union that he would impose "much higher" tariffs on EU goods unless the bloc eliminates its tariffs on US products by July 4.

Money markets are pricing in over 50 basis points of ECB tightening, or at least two rate hikes, by year-end, with a more than 75% chance of a first increase in June.

Several ECB officials have recently signaled a higher likelihood of rate hikes due to persistent inflation pressures.



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