Euro Holds Steady as Traders Balance ECB and Fed Policy Signals Amid Oil Shock

The EUR/USD pair was little changed on Friday as investors recalibrated the inflationary fallout from a sharp rise in oil prices. Escalating geopolitical tensions in the Middle East have disrupted energy flows through the Strait of Hormuz, pushing crude higher and complicating the rate outlook for major central banks. The currency pair hovered near 1.1438 and looked set to close the week with slight gains.

Crude oil has climbed roughly 12% this week, strengthening the case that the European Central Bank and the Federal Reserve may need to maintain a tighter policy stance for an extended period to keep inflation in check. Nevertheless, softer June inflation readings from both the United States and the Eurozone have diminished bets on imminent rate increases.

The ECB is broadly anticipated to keep its benchmark rate steady at 2.25% during next week’s meeting, after delivering a 25-basis-point hike in June.

Despite the expected pause, another ECB tightening later this year cannot be ruled out, with upside inflation risks persisting. Money markets have fully factored in a potential rate lift in September.

Across the Atlantic, expectations for a near-term Fed hike have eased, though pricing from the CME FedWatch Tool still implies about a 75% probability of an increase by December.

Fed policymakers continue to emphasize the objective of returning inflation durably to the 2% target, while noting that the labor market has shown signs of stabilization. This leaves the door open for a rate increase later in the year should price pressures prove sticky.

In response, the US Dollar recovered some losses after an earlier slump, buoyed by hawkish Fed expectations and safe-haven demand tied to geopolitical unrest. The US Dollar Index (DXY), measuring the Greenback against six major peers, held around 100.76 after touching a three-week low of 100.35 on Wednesday.

Friday’s data revealed the preliminary University of Michigan Consumer Sentiment Index rose to 54.4 in July from 49.5 in June, surpassing the consensus estimate of 51. The survey’s one-year inflation expectations eased to 4.2% from 4.6%, while the five-year gauge was unchanged at 3.3%.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHFUSD0.02%0.18%0.06%-0.23%0.17%-0.02%-0.19%EUR-0.02%0.16%0.04%-0.28%0.17%-0.04%-0.21%GBP-0.18%-0.16%-0.13%-0.43%-0.01%-0.19%-0.39%JPY-0.06%-0.04%0.13%-0.30%0.13%-0.08%-0.25%CAD0.23%0.28%0.43%0.30%0.43%0.23%0.05%AUD-0.17%-0.17%0.01%-0.13%-0.43%-0.21%-0.39%NZD0.02%0.04%0.19%0.08%-0.23%0.21%-0.18%CHF0.19%0.21%0.39%0.25%-0.05%0.39%0.18%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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