ECB sources say further tightening remains likely – Reuters

The European Central Bank (ECB) is anticipated to further tighten monetary policy in the coming months, with the possibility of raising interest rates in October, according to Reuters sources. Following a 0.25% rate hike on Thursday, the ECB acknowledged rising inflation risks and declining growth risks. The bank's preemptive actions were prompted by soaring energy prices, largely due to the ongoing conflicts in the US-Iran and Russia-Ukraine regions.

ECB President Lagarde, during a press conference, refused to predict the next move and reiterated the 'meeting-by-meeting' approach. The table below illustrates the percentage change of the Euro (EUR) against major global currencies today, revealing that the Euro is currently the strongest against the Australian Dollar. A heat map also displays the percentage changes between major currencies against each other, with the Euro (base) and US Dollar (quote) highlighted.

Analysts report that AUD/USD is expected to extend its consolidative price move above 0.7200 during the Asian session, supported by hawkish expectations from the Reserve Bank of Australia (RBA) and escalating US-Iran tensions. Meanwhile, USD/JPY stabilizes above 153.50 during the Asian session but remains near a seven-month low, as hawkish expectations from the Bank of Japan (BoJ) continue to bolster the Japanese Yen.

Rising expectations of a September Fed rate hike and the same US-Iran tensions ease some pressure on the US Dollar, providing support for the currency ahead of US inflation figures. Gold slips back toward the $4,350 region amid the robust bounce in the US Dollar and rising US Treasury yields, particularly following US Producer Prices and before Friday’s more relevant US CPI data.