Euro Holds Steady with ECB Rate Hike Looming Amidst Gulf Tensions

The euro remained stable near a recent low ahead of the European Central Bank meeting, where a rate hike is expected. Market focus is on policy guidance as traders monitor Gulf tensions and U.S. inflation reports. Global currency movements remain muted amid geopolitical developments and economic data releases.

The euro was steady on Thursday, trading near the recent lows as the European Central Bank prepared for its first rate hike in nearly three years. Markets are also wary of ongoing tensions in the Gulf.

The currency traded at $1.1536, closer to mid-March lows than mid-April highs. MUFG’s Lee Hardman noted that the euro's decline aligns with heightened expectations of tighter Federal Reserve policy, matching shifts in ECB expectations due to Middle East conflicts.

The ECB meeting may not fully satisfy market expectations unless President Christine Lagarde hints at another rate increase soon. Though the British pound and Japanese yen were similarly stable against the dollar, traders remain concerned about potential intervention from Tokyo as the Bank of Japan prepares for its upcoming rate hike meeting.