Euro Rises as Markets Anticipate ECB Tightening

2026-06-05 07:59 By Joana Ferreira 1 min. read

The euro climbed further above $1.16 as investors prepared for a likely European Central Bank interest rate hike next week, while maintaining cautious optimism about a potential Middle East resolution.

Markets now price in a near-certain 25-basis-point ECB rate increase at the June 11 meeting, with two or possibly three hikes expected this year.

This follows data showing euro-area inflation hit 3.2% in May, its highest in over two and a half years, with core and services inflation accelerating, signaling broadening price pressures beyond energy.

However, uncertainty remains as policymakers balance high inflation with sluggish economic growth.

ECB hawk Isabel Schnabel cautioned on Monday that it is premature to specify the number of rate hikes needed.

Meanwhile, US-Iran negotiations continued, and military clashes between Lebanon and Israel persisted despite a pending US-brokered ceasefire.



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