Euro Slips Below 1.16 Amid Growing Expectations of September Rate Hike

The Euro has come under pressure as expectations for an upcoming European Central Bank (ECB) rate hike continue to grow. According to Danske Research Team, the EUR/USD slipped below 1.1600 as the US Dollar strengthened on a hawkish Federal Reserve stance and geopolitical tensions.

The team notes that Euro area inflation has moved back above 3%, which reinforces expectations for a September ECB rate hike. This is driven by higher energy prices, while core inflation declined to 2.4% due to lower services inflation.

Manufacturing data show a rebound in the Euro area, led by Germany, where the PMI was revised up to 54.3 from 54.1. However, new data for Spain and Italy showed PMIs falling slightly below the 50-mark.