Euro Edges Up as Oil Prices Surge, Reviving Hawkish Fed Bets
The Euro edged up to near 1.1385 against the US Dollar on Friday as the latter corrected marginally after a strong upside move the previous day.
Elevated oil prices due to disruptions in global energy supply have revived hawkish Federal Reserve bets, with the odds of an interest rate hike next week standing at 33.7% according to the CME FedWatch tool, significantly higher than 11.8% last week.
ECB officials warned that high energy prices could keep price pressures elevated for longer, with Governing Council member Gediminas Simkus stating that '$100 oil will have repercussions on inflation, and it is seen higher than target for a long time.'
ECB President Christine Lagarde also emphasized the risk of prolonged upside inflation risks, saying 'Risks to inflation tilted to the upside. Energy shock likely to keep inflation well above target into first half of 2027.'