Euro Stalls at Mid-May High as Traders Eye ECB Rate Outlook

The euro held steady near its highest level since mid-May, trading above $1.165 as investors assessed the impact of falling oil prices and European Central Bank interest rates.

Iran's announcement that it had resumed talks with Oman on managing the Strait of Hormuz boosted hopes for a reopening of the waterway, potentially easing disruptions to energy shipments.

According to Reuters, ECB policymakers are prepared to raise rates at their September meeting to mitigate the economic fallout from the Iran war. However, they are hesitant to signal further tightening after that point.

ECB board member Isabel Schnabel noted that if the Middle East conflict persists, rates may need to rise further to address upside risks to inflation stemming from a resilient euro-area economy.