The euro fell to around $1.135, its lowest level since May 2025, as stalled negotiations over reopening the Strait of Hormuz pushed oil prices higher and increased demand for the US dollar as a safe haven. Investors also assessed ECB (European Central Bank) President Christine Lagarde’s comments and flash inflation data. Lagarde said the recent inflation surge had not yet created significant second-round effects across the euro area, supporting a measured policy response. Eurozone inflation is already above 3% and could approach 4% by year-end, while markets are pricing in as many as four additional rate hikes over the next year after two increases during the summer. Economists generally expect the ECB to hold rates at its October 29 meeting and resume tightening in December, when updated economic projections are due. Spain’s harmonized inflation rate rose to 5% in September, its highest level in three years and well above the ECB’s 2% target.