EUR/USD falls to 1.1385 after the ECB maintains rates, while USD strengthens amid escalating geopolitical tensions in the Middle East.
The European Central Bank kept its key interest rates unchanged at its July meeting, with the main refinancing rate held at 2.4%, the marginal lending facility at 2.65%, and the deposit facility at 2.25%. The decision aligned with market expectations, though the ECB warned of volatile energy prices and unresolved inflation risks from recent shocks.
The central bank emphasized a data-dependent approach, avoiding commitments to future rate paths. Prior to the decision, EUR/USD traded near 1.1385, reflecting investor caution ahead of the announcement and broader market sentiment.
The US Dollar gained ground as safe-haven demand surged following renewed Middle East tensions, including US strikes on Iran and retaliatory attacks on US bases. Disruptions in key oil shipping routes further pressured energy markets, with WTI crude prices reacting to threats in the Red Sea and Strait of Hormuz.