Markets price a 35.8% chance of a Fed rate hike this month amid oil-driven inflation fears and geopolitical risks.
EUR/USD rose to 1.1380 in Asian trading Friday, recovering from prior losses as the US Dollar weakened. The move comes despite escalating Middle East tensions, which threaten to lift crude oil prices and stoke inflation concerns.
Money markets now assign a 35.8% probability of a Fed rate hike in July, with an 82.1% chance of at least a 25-basis-point increase in September. The shift follows reports of Houthi attacks on Saudi oil tankers and US military strikes on Iran, heightening geopolitical risks.
Trade tensions also weighed as the US prepares new tariffs of 10%-12.5% on imports from key trading partners. The measures aim to rebuild trade barriers after a recent Supreme Court ruling.