Euro Hits 3-Month High as ECB Rate Hike Bets Intensify

Key Facts

1The euro climbed to $1.1697 against the dollar, its strongest level in three months.

2Spanish harmonised inflation hit 4.5%, its highest reading since 2023.

3Markets expect the ECB deposit rate to reach 2.80% by next March from the current 2.25%.

Amid persistent inflationary pressures within the Eurozone, the single currency demonstrated genuine momentum as August concluded. According to reports, the euro climbed to $1.1697 against the dollar, marking its strongest level in three months, fueled by intensifying bets on European Central Bank (ECB) rate hikes. This rally follows a surprise jump in Spanish harmonised inflation to 4.5%, its highest reading since 2023, reinforcing expectations for more aggressive monetary tightening.

Market pricing now suggests the ECB deposit rate could reach 2.80% by next March, up from the current 2.25%. Per analyst data, a September rate hike is now viewed as approximately 60% likely. This hawkish shift contrasts with the mixed signals from the Bank of England (BoE), where UK inflation has eased to 2.9% and private-sector wage growth has hit its softest pace since 2020, creating a divergence that favors the euro over the pound.

As of September 1, 2026, EURUSD price action remains sensitive to upcoming macroeconomic catalysts, though specific real-time price levels are currently unavailable in the database. Traders should watch for further commentary from ECB officials, as the bullish narrative remains tied to whether inflation data continues to surprise to the upside, maintaining pressure on the central bank to act.