The euro advanced against a basket of major currencies in European trading on Thursday, extending gains against the US dollar for a second consecutive session ahead of the European Central Bank's monetary policy decision later today.

The ECB is widely expected to leave interest rates unchanged after raising them by 25 basis points at its previous meeting. Markets will closely watch for signals that policymakers remain open to additional tightening at the September meeting if inflationary pressures continue to build amid the recent rise in global oil prices.

The Price

The euro rose more than 0.2% against the US dollar to $1.1436, up from the day's opening level of $1.1411, after touching an intraday low of $1.1405.

The euro closed 0.1% higher against the US dollar on Wednesday, marking its first daily gain in five sessions as it recovered from a one-week low of $1.1395.

European Central Bank

The European Central Bank will conclude its fifth monetary policy meeting of 2026 later today, with markets expecting interest rates to remain unchanged. Investors will focus on the accompanying policy statement for fresh guidance on the outlook for interest rates over the remainder of the year.

Current expectations point to the ECB keeping its key interest rate unchanged at 2.40%, the highest level since April 2025, following the 25-basis-point increase delivered at the previous meeting.

The ECB's interest rate decision and monetary policy statement are due at 12:15 GMT, followed by ECB President Christine Lagarde's press conference at 12:45 GMT.

According to some forecasts, the ECB is expected to keep the door open for another interest rate hike in September, as the latest surge in energy prices threatens to reignite inflationary pressures across Europe.

Analysts believe that with oil prices climbing back above $90 per barrel due to the renewed conflict in the Middle East, the ECB could be forced to tighten policy again this autumn to prevent higher energy costs from triggering a broader inflationary spiral.

Euro outlook

We expect the euro to extend its gains against a basket of major currencies if the European Central Bank delivers a more hawkish message than markets currently anticipate, boosting expectations for a September interest rate hike.