Euro Firm as ECB Prepares Rate Hike Amid Oil Price Surge

Major currencies have held steady on Thursday as global bond yields rose to multi-decade highs due to renewed inflation concerns. Oil prices remain above $100 a barrel for a second day, with energy flows from the Gulf slowed to a trickle following attacks by Iran and the US.

The European Central Bank is expected to tackle the inflation threat by raising euro zone rates for a second time since the war started in late February. The ECB decision comes as global bond yields have surged, but safe-haven flows into the dollar remain limited.

Richard Franulovich, head of FX strategy at Westpac Institutional Bank, said markets are becoming less sensitive to oil shocks as the war drags on. He added that debasement trades, central bank tightening, and a more interventionist Treasury Department are all drags on the dollar 'washing through in the background.'

The euro has traded near two-week highs ahead of the ECB decision, with the single currency up 0.1% to $1.1639. The yuan has also strengthened, trading around 6.705 per dollar in the offshore market.