Euro Weakens Further to Over One-Year Low

2026-09-29 08:05 By Joana Ferreira 1 min. read

The euro fell to around $1.135, its lowest since May 2025, pressured by broad dollar strength and expectations that monetary tightening in Europe will lag the US.

Stalled talks over reopening the Strait of Hormuz pushed oil prices higher, reinforcing expectations of further Fed rate hikes and boosting safe-haven demand for the dollar.

Meanwhile, ECB President Christine Lagarde said Monday that the recent inflation surge has yet to generate significant second-round effects, suggesting a measured policy response.

The eurozone’s weak outlook could also limit aggressive ECB tightening, with GDP seen growing just 0.9% this year.

The currency also remained under pressure from political uncertainty ahead of key elections in France, Spain and Italy next year.

Still, with inflation above 3% and potentially nearing 4% by year-end, markets are pricing in up to four additional rate hikes over the next year, with the ECB expected to resume tightening in December when fresh projections are released.



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