Euro at $1.12

2026-10-15 08:45 By Joana Taborda 1 min. read

The euro traded around $1.12, recovering slightly from lows touched earlier in the month, supported by broad-based dollar weakness.

Despite the modest rebound, the common currency remains near its lowest levels since May 2025, as expectations of further Fed tightening to contain persistent inflation have bolstered the greenback.

The euro has faced additional pressure from political uncertainty in Europe, particularly in France.

ECB President Lagarde stressed that France must address its debt challenges through fiscal consolidation, dampening speculation that the central bank could intervene by purchasing French bonds to contain yields.

Lagarde also noted that energy-driven inflation had yet to spread to the broader euro-area economy, supporting a cautious approach to interest rates.

However, ECB policymaker Šimkus maintained that a rate hike as early as this month remained possible if necessary.

Markets continue to expect another ECB rate increase in December.



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Euro at $1.12
The euro traded around $1.12, recovering slightly from lows touched earlier in the month, supported by broad-based dollar weakness. Despite the modest rebound, the common currency remains near its lowest levels since May 2025, as expectations of further Fed tightening to contain persistent inflation have bolstered the greenback. The euro has faced additional pressure from political uncertainty in Europe, particularly in France. ECB President Lagarde stressed that France must address its debt challenges through fiscal consolidation, dampening speculation that the central bank could intervene by purchasing French bonds to contain yields. Lagarde also noted that energy-driven inflation had yet to spread to the broader euro-area economy, supporting a cautious approach to interest rates. However, ECB policymaker Šimkus maintained that a rate hike as early as this month remained possible if necessary. Markets continue to expect another ECB rate increase in December.
2026-10-15
Euro Rebounds
The euro rebounded to around $1.12 from its lowest level in a year and a half, as the US dollar retreated after Federal Reserve officials signaled they could wait for a clearer picture before taking further action. The cautious remarks prompted traders to scale back bets on an October rate hike, offsetting support for the greenback from hotter-than-expected US inflation data. Meanwhile, expectations that the ECB would postpone further rate hikes until December, coupled with concerns that persistent inflation could dampen economic growth, continued to pressure the euro. Fiscal uncertainty in highly indebted countries, particularly France, further clouded the currency's outlook. ECB President Christine Lagarde said energy-driven inflation had yet to spill over into the broader euro-area economy, supporting a cautious approach to monetary policy. However, ECB policymaker Gediminas Šimkus maintained that a rate hike this month remained possible if needed.
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The euro tumbled to $1.11, touching its weakest level since May 2025, as investors flocked to the US dollar as stronger-than-expected US inflation data boosted expectations of a Federal Reserve rate hike in October. US inflation rose to 3.7% year-on-year in September, above forecasts of 3.6%, while core inflation also exceeded expectations. Meanwhile, expectations that the ECB will delay further rate hikes until December, alongside concerns over the impact of rising inflation on economic growth, continued to weigh on the common currency. Fiscal pressures in highly indebted countries, particularly France, added to the downside risks. ECB President Christine Lagarde noted that elevated energy-driven inflation has yet to spread across the broader euro-area economy, reinforcing the case for a wait-and-see approach. However, ECB policymaker Gediminas Šimkus said another rate hike could be necessary and could not be ruled out this month.
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