07.07.202609:16:03UTC+00Euro Holds Near $1.14 as Oil Surge Fuels Inflation Fears

The euro held just above $1.14, largely unchanged from recent sessions, as rising oil prices intensified concerns about inflation. Crude climbed back above $72 per barrel after attacks in the Strait of Hormuz highlighted persistent risks to global shipping. In response, traders increased their bets on further ECB rate hikes following comments from Executive Board member Isabel Schnabel, who warned that the conflict with Iran could have lasting economic repercussions, with core inflation still running high.

Upside for the common currency remained limited, however, as softer inflation readings and dovish remarks from ECB President Christine Lagarde tempered expectations. Lagarde noted last week that the outlook for inflation and growth in the euro area had become more balanced.

On the fiscal front, Germany’s cabinet on Monday approved a draft budget for 2027 that foresees €555.4 billion in spending, with planned borrowing rising to €203.6 billion, up from the €196.5 billion projected in April. In France, a Paris court is set to rule on Tuesday on Marine Le Pen’s appeal against an election ban imposed over alleged misuse of EU funds—a decision that could weigh heavily on her 2027 presidential ambitions and add to mounting political uncertainty.