The euro ended September near $1.135, close to its lowest level since May 2025, after losing more than 2% against the US dollar during the month. Markets expected the ECB (eurozone central bank) to lag the Federal Reserve in tightening, while pricing in additional ECB rate increases over the coming year, potentially beginning in December alongside updated economic projections. Expectations for another Federal Reserve hike remained elevated, although New York Fed President John Williams recently tempered bets on an October move. Inflation in France and Spain accelerated more than expected in September, but ECB President Christine Lagarde said the increase had not yet produced significant second-round effects, referring to broader wage and price pressures. Eurozone growth is seen at just 0.9% this year, potentially limiting aggressive tightening, while political uncertainty ahead of elections in France, Spain and Italy next year continued to weigh on the currency.