Euro Faces Uphill Battle as Energy Costs Weigh on Economy

The European Central Bank (ECB) has almost finished pricing its September inflation outlook at 3.3%, which is in line with investors' expectations.

This has kept the ECB on its current path, with several policymakers already comfortable with tightening again.

The more interesting reaction came from European bonds, where yields stayed under pressure due to high inflation and unpredictable energy costs.

This keeps borrowing costs elevated even as growth loses momentum in parts of the eurozone.

The ECB has largely won the argument about September, but the market's focus is now on the US dollar, which has become stronger again after Fed official Kevin Warsh defended the central bank's willingness to keep financial conditions restrictive at Jackson Hole.