The euro held just below $1.16, on track for a 0.5% weekly gain, as a weaker USD, boosted by optimism over a potential Middle East peace deal, provided support. US President Donald Trump suggested a US-Iran agreement could be signed as early as this weekend, though Tehran has yet to confirm a final decision. Meanwhile, investors continued to digest the European Central Bank’s decision to raise interest rates for the first time in three years, a move aimed at preempting a broader inflation surge driven by rising fuel costs. Money markets now price in another rate hike, most likely in September, though July remains a possibility. The ECB also upwardly revised its inflation forecasts, projecting headline inflation at 3.0% for 2026 (up from 2.6%) and 2.3% for 2027 (up from 2.0%), with core inflation now expected at 2.5% for both years (revised up from 2.3% and 2.2%). Meanwhile, the growth outlook was slightly downgraded, with Eurozone GDP now forecast at 0.8% in 2026 and 1.2% in 2027.