Euro Steadies Ahead of ECB Rate Decision Amid Ongoing US-Iran Conflict

The Euro has steadied above $1.1600 ahead of Thursday's European Central Bank (ECB) rate decision and US PPI data release.

Alessia Berardi, head of global macroeconomics at the Amundi Investment Institute, believes 'a September hike looks all but locked in' due to surging energy prices driven by the ongoing US-Iran conflict. Eurozone inflation has risen back above 3% in August, with traders fully pricing in a 25 basis points (bps) move to 2.5%.

The ECB's decision will be closely watched, particularly as it relates to interest rates and monetary policy. A hawkish hike is expected tomorrow, with President Lagarde unveiling the latest forecast and signaling ongoing concern about upside risk. This reinforces the market's conviction in a continued tightening bias.