Euro holds recent gains despite high Oil prices with ECB decision in focus

The Euro (EUR) saw slight gains on Thursday against the US Dollar (USD), though it remained near the 1.1650 level. Investors are waiting for the European Central Bank (ECB) decision on monetary policy, with a rate hike of 25 basis points widely expected. Focus will be on President Lagarde's press conference, providing further insight into ECB strategies amidst rising inflationary pressures due to the Middle East conflict.

Meanwhile, the US Dollar (USD) struggles to gain traction from its usual safe-haven appeal, undermined by the US Treasury's bond buyback program disappointment, the USD/JPY carry trade unwind, and concerns over the US's mounting debt. FX strategists at Brown Brothers Harriman believe that even if a September Fed rate increase occurs, the USD won't reach new cyclical highs due to tightening by other central banks, including the ECB, which is anticipated to raise rates by 25 basis points.

On the US front, the Producer Price Index (PPI) is expected to show an accelerated inflation rate of 5.3% in August, up from 4.7% in July. The main attention this week is on the Consumer Price Index (CPI), due on Friday, to confirm market expectations of a Fed rate hike next week.