Global Economy
Euro hits three‑month low against dollar as oil rise and Fed rate hike bets weigh
The euro slipped to a three‑month low around $1.1344 on Tuesday, September 29, 2026, as rising oil prices and higher U.S. Treasury yields reinforced expectations for tighter Federal Reserve policy. Market data from CME Group shows over a 70% chance of a rate hike in late October, while the ECB continues to adopt a measured approach, projecting modest growth and inflation. Analysts forecast up to four additional ECB moves next year, though a pause in October is still likely.
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Euro slides to three‑month low as oil and yields rise
On Tuesday, September 29, 2026, the euro fell to around $1.1344, its weakest level in three months, pressured by higher oil prices and rising U.S. bond yields. Traders are recalibrating expectations for Federal Reserve policy after data showed energy costs sparking fresh inflation concerns.
Oil futures, with Brent topping $106 a barrel, and climbing Treasury yields have boosted the dollar. Market data from CME Group cited by Reuters now puts the probability of a Fed rate increase in late October above 70%. In the eurozone, the ECB maintains a measured stance. President Christine Lagarde noted on Monday that energy‑price hikes have not yet sparked a significant wage acceleration. After a 25‑basis‑point hike in September, the bank projects 2026 growth of 0.9% and average inflation of 3%.
Analysts anticipate up to four additional ECB rate moves over the coming year, though many expect a pause in October followed by a possible hike in December when new forecasts are released. The euro’s recent decline reflects broader market tension between higher energy costs, tighter monetary policy prospects, and divergent central‑bank paths.