Euro Hits 8-week High

EURUSD increased to 1.16, the highest since June 2026. Over the past 4 weeks, Euro US Dollar gained 1.01%, and in the last 12 months, it decreased 1.04%.

The euro has been trading around $1.15 in August, near two-month highs, as traders navigate shifting developments in the Middle East and conflicting signals over the prospects of a deal between the US and Iran, while also assessing the resulting rise in oil prices and its impact on inflation. In Europe, market-based measures of inflation expectations, reflected in swaps for the Euro Area over the next year, are around 2.4%, above the ECB’s 2% target. Eurozone inflation edged up to 2.9% in July. Meanwhile, the Euro Area economic outlook has improved, with recent resilience prompting analysts to become more optimistic about growth. The Eurozone economy expanded 0.4% in Q2, the strongest pace since early 2025 and growth is projected to moderate in the near term before gradually gaining momentum. As a result, investors expect the ECB to deliver another 25bps rate hike in September.

The euro remained above $1.155, close to an eight-week high, as investors weighed mixed signals from the US and Iran over the prospects for reopening the Strait of Hormuz. Iran’s Foreign Minister said an agreement with Oman to establish a shipping route through the strait was “very close,” but cautioned that it would not immediately restore shipping flows. Meanwhile, the Euro Area outlook has improved, with recent economic resilience prompting analysts to become more optimistic about growth. Second estimates later this week are expected to confirm the Eurozone economy expanded by 0.4% in Q2, the most since early 2025. Looking ahead, growth is projected to moderate in the near term before gradually gaining momentum. On the monetary policy front, the European Central Bank left interest rates unchanged in July following a 25bps increase in June, its first hike in three years, while expectations of a near-term Federal Reserve rate hike eased.