Euro Slides as Inflation Eases

2026-07-01 13:46 By Joana Ferreira 1 min. read

The euro weakened below $1.14, approaching a one-year low after a 2% decline against the US dollar in June.

Investors digested softer-than-expected Eurozone inflation data, with the flash CPI report showing headline inflation falling to 2.8% in June and the core rate dropping to 2.4%, offering some relief to European Central Bank policymakers.

At the ECB’s Sintra Forum, ECB President Christine Lagarde noted that risks to inflation and growth in the euro area have become less pronounced.

This shift follows the ECB’s decision just three weeks earlier to become the first G7 central bank to raise interest rates after the outbreak of the Iran war, justified by concerns over inflation spreading through the economy.

Since then, the US-Iran peace accord has significantly reduced oil prices, removing a key inflation driver.

Elsewhere, the dollar remains supported by expectations that the US Federal Reserve will raise interest rates later this year.



News Stream
Euro Slides as Inflation Eases
The euro weakened below $1.14, approaching a one-year low after a 2% decline against the US dollar in June. Investors digested softer-than-expected Eurozone inflation data, with the flash CPI report showing headline inflation falling to 2.8% in June and the core rate dropping to 2.4%, offering some relief to European Central Bank policymakers. At the ECB’s Sintra Forum, ECB President Christine Lagarde noted that risks to inflation and growth in the euro area have become less pronounced. This shift follows the ECB’s decision just three weeks earlier to become the first G7 central bank to raise interest rates after the outbreak of the Iran war, justified by concerns over inflation spreading through the economy. Since then, the US-Iran peace accord has significantly reduced oil prices, removing a key inflation driver. Elsewhere, the dollar remains supported by expectations that the US Federal Reserve will raise interest rates later this year.
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Euro Starts Q3 on a Weak Note
The euro entered the third quarter of 2026 at $1.14, close to a one-year low and following a 2% drop against the USD in June. Investors are closely watching the ECB’s Sintra Forum and inflation updates from Europe’s major economies, while the dollar remains supported by expectations that the US Federal Reserve will raise interest rates this year. All eyes are on today’s panel featuring ECB President Christine Lagarde and new Fed Chair Kevin Warsh, as markets look for clues on economic assessments and future policy directions. Meanwhile, recent inflation data across Europe pointed to easing price pressures, providing some relief to ECB policymakers. Investors are also awaiting updates from the US-Iran peace talks in Qatar, with hopes for a lasting ceasefire agreement, though direct talks between the two sides are not anticipated.
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Euro Near One-Year Low
The euro closed June at around $1.14, close to its one-year low, as investors turned their attention to the ECB’s Sintra Forum and inflation updates from Europe’s major economies. The highlight is Wednesday’s panel with ECB President Christine Lagarde as markets seek clues on economic assessments and policy directions. Inflation data indicated easing price pressures in Germany, France and Italy in June, while Spain’s rates stayed near two-year highs. The euro is on track for a monthly loss of over 2% against the US dollar and a 1.3% quarterly decline, with investors expecting the US Federal Reserve to raise interest rates this year to curb inflation amid a robust labor market. Meanwhile, the US-Iran ceasefire, which reopened the Strait of Hormuz, has lowered oil prices and inflation expectations, leading markets to scale back bets on rate hikes by the ECB and Bank of England.
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