Euro Weakens to Lowest Level Since Mid-March
The euro hovered around US$1.145 in the latest trading on Friday (June 19), reaching its weakest level since mid-March. The single European currency also has the potential to record a weekly decline of around 1%, as the US dollar strengthens broadly in the foreign exchange market.
Sentiment toward the euro was further undermined after planned peace talks between the United States and Iran in Switzerland were abruptly canceled. The cancellation raised doubts about the durability of the interim agreement reached last weekend to end the conflict in the Middle East. This situation has made investors cautious about riskier assets.
The US dollar received additional support from the Federal Reserve, which maintained interest rates but signaled a more hawkish policy stance in its latest projections. This stance led the market to believe that further monetary tightening in the United States remains possible. As a result, the US dollar remained strong and exerted pressure on the EUR/USD pair.
In Europe, market focus is on the European Central Bank (ECB), which recently raised interest rates for the first time since 2023. Financial markets are now pricing in at least one additional rate hike this year, given ECB officials' firm stance on inflation. Pierre Wunsch said the next rate hike could come as soon as next month if inflationary pressures spread beyond the energy sector, while Philip Lane believes the eurozone economy is still capable of absorbing higher borrowing costs without losing momentum. (asd)
Source: Newsmaker.id
