Euro Weakens Further

2026-06-23 09:19 By Joana Taborda 1 min. read

The euro traded below $1.14, close to June 2025-lows, under pressure from broad US dollar strength amid expectations that the Fed will raise interest rates later this year following hawkish comments from Fed officials last week.

In the Euro Area, the ECB raised interest rates by 25bps this month, in line with expectations.

However, ECB President Lagarde said yesterday that the central bank does not need to respond more aggressively to developments stemming from the Middle East conflict, noting that inflation is expected to return to target over the medium term.

Markets have since pared back some expectations for additional ECB tightening following Lagarde’s comments, though investors still price in at least one more 25bps hike this year.

Meanwhile, weaker economic data added to the cautious outlook.

Preliminary PMI readings showed that private sector activity in Germany contracted at the fastest pace since 2024, while the Euro Area also remained in contraction territory.



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