Currency market news
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The gist
Euro hits nine-week high near $1.16 as markets trim Fed rate hike bets. Rate expectations and geopolitics drive currency moves, affecting global trade and investment.
Background
Currency markets are reacting to shifting expectations for central bank policies. The euro strengthened after softer US data reduced odds of further Federal Reserve tightening, while the European Central Bank is expected to raise rates in September. Geopolitical tensions, including the US-Iran conflict, have influenced oil prices and inflation, but FX markets appear increasingly desensitized to such headlines.
How it unfolded
- Jul 31, 2026Eurozone inflation ticked up to 2.9% year-on-year, driven by rising energy prices linked to the US-Iran conflict.
- Aug 3, 2026Coordinated US-Japan intervention pushed the yen from 163 to 157 against the dollar.
- Aug 12, 2026Markets anticipated ECB rate hike on September 10, seen as possibly the only one for the year.
- Aug 17, 2026Euro flat at $1.1573; dollar weakened as soft US data doused Fed rate hike expectations.
- Aug 18, 2026Euro hit a nine-week high against the dollar before slipping back below 1.16.
Who’s saying what
- Analysts
- FX markets are desensitised to geopolitical headlines, with rates-driven regime reasserting itself.
- Bulls
- Euro remains well supported and could extend gains if dollar weakness continues.
- Bears
- Euro's ability to gain depends more on the dollar than on European developments.
Still unverified
Reports that Binance is under US investigation for allowing Iran to evade sanctions are based on law enforcement documents reviewed by Reuters, but not officially confirmed.