EUR/USD Reaches One-Year Low as Inflation Threat Looms

The EUR/USD has fallen to its lowest level since May 2025, reaching 1.1312 on Wednesday and trading below the January peak of 1.2082.

The decline reflects a combination of US Dollar strength, geopolitical uncertainty, and concerns about Europe's exposure to higher energy prices.

However, accelerating inflation across the Eurozone could provide an unexpected lifeline for the Euro, as it may force the European Central Bank (ECB) to tighten monetary policy further despite an already fragile economy.

Preliminary September data from Spain, France, Italy, and Germany have shown HICP inflation rising above expectations, with Spain's inflation rate reaching 5% YoY in September.