Euro Hits Lowest Level Since May 2025 Amid Expectations of Slow ECB Tightening

The euro finished September at its lowest level since May 2025, near $1.135, after falling more than 2% against the US dollar over the month.

This decline was largely attributed to expectations that the European Central Bank (ECB) would lag behind the Federal Reserve in tightening monetary policy.

Markets are pricing in further ECB rate increases over the coming year, with the next move potentially coming in December alongside the ECB's updated economic projections.

However, recent comments from New York Fed President John Williams have tempered bets on an October Federal Reserve hike, which had previously been a strong possibility.