Euro Rises Amid Middle East Tensions as Fed Rate Hike Odds Rise
Despite rising tensions in the Middle East, the Euro has gained strength against the US Dollar. According to the CME FedWatch tool, there's a 35.8% chance of a Federal Reserve rate hike this month and an 82.1% probability of at least a quarter-point hike in September.
The US conducted its 13th consecutive night of military strikes on Iran after Yemen's Houthi militant group attacked two Saudi oil tankers in the Red Sea for allegedly violating a blockade. President Donald Trump warned of 'major military punishment' for both the Houthis and Iran if attacks continue, stating he is close to deciding on a massive, unprecedented military operation against Iran.
The US plans to impose new tariffs ranging between 10% and 12.5% on imports from major trading partners, including Europe, which will face tariffs of at least 10%. The European Central Bank (ECB) held its key interest rates steady, keeping the deposit facility, main refinancing, and marginal lending rates at 2.25%, 2.40%, and 2.65%, respectively.