Euro Stays Near One-Year Lows on Soft Inflation

2026-07-02 08:02 By Joana Ferreira 1 min. read

The euro rebounded to $1.14 but remained near one-year lows against the dollar and pound, pressured by softer-than-expected Eurozone inflation and dovish remarks from ECB President Christine Lagarde.

Wednesday’s data showed headline inflation falling to 2.8% in June from 3.2% in May, below expectations of 3.0%, while the core rate dropped to 2.4%, also under forecasts of 2.6%.

At the ECB’s Sintra Forum, Lagarde noted that risks to euro-area inflation and growth have diminished.

This shift follows the ECB’s decision three weeks earlier to become the first G7 central bank to hike rates after the Iran war, citing concerns over inflation spreading.

Since then, hopes for a US-Iran peace accord have sharply lowered oil prices, removing a key inflation driver.

Elsewhere, traders welcomed progress in indirect US-Iran talks, with Qatar announcing the next meeting would be scheduled as soon as possible.

Oil prices continued to fall as more shipments passed through the Strait of Hormuz.



News Stream
Euro Stays Near One-Year Lows on Soft Inflation
The euro rebounded to $1.14 but remained near one-year lows against the dollar and pound, pressured by softer-than-expected Eurozone inflation and dovish remarks from ECB President Christine Lagarde. Wednesday’s data showed headline inflation falling to 2.8% in June from 3.2% in May, below expectations of 3.0%, while the core rate dropped to 2.4%, also under forecasts of 2.6%. At the ECB’s Sintra Forum, Lagarde noted that risks to euro-area inflation and growth have diminished. This shift follows the ECB’s decision three weeks earlier to become the first G7 central bank to hike rates after the Iran war, citing concerns over inflation spreading. Since then, hopes for a US-Iran peace accord have sharply lowered oil prices, removing a key inflation driver. Elsewhere, traders welcomed progress in indirect US-Iran talks, with Qatar announcing the next meeting would be scheduled as soon as possible. Oil prices continued to fall as more shipments passed through the Strait of Hormuz.
2026-07-02
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.
2026-07-01