Euro Hits Lowest Level Since July Amid Oil Price Drop and Strong PMI Data

The euro has weakened to its lowest level since July 29, touching $1.14, as traders reassess expectations for further ECB rate hikes.

The decline follows a drop in oil prices, with Brent crude falling below $100 a barrel due to progress in US-Iran talks and efforts to restore operations at a key Saudi Arabian pipeline.

ECB officials have acknowledged the impact of oil prices on policy decisions. Joachim Nagel noted that oil prices are becoming increasingly important for policymakers, leaving room for further hikes if necessary.

However, ECB Chief Economist Philip Lane expressed caution, warning that another surge in energy prices could keep eurozone inflation elevated longer than expected.

The euro's decline also coincides with stronger-than-expected flash PMI data, showing eurozone private-sector activity expanding at its fastest pace in almost three-and-a-half years.