This shift indicates that inflation is becoming more entrenched across sectors, intensifying the challenge for the European Central Bank as it balances rising prices against mounting economic growth risks.

In response to widespread price pressures, financial markets fully expect the ECB to implement a 25-basis-point interest rate hike at its June 11 meeting, with potential for multiple additional increases later this year. This hawkish trajectory contrasts sharply with the Federal Reserve, which is widely projected to hold rates steady, providing underlying support for the euro. Meanwhile, the broader global economy faces headwinds from elevated oil prices, prompting Fitch Ratings to lower its 2026 global growth forecast to 2.4% due to expected strain on investment, consumer demand, and supply chains.

Please take a look at the file below for further analysis.