The euro climbed toward $1.164, buoyed by cautious optimism over a potential Middle East resolution and as investors positioned for the European Central Bank’s meeting next week. Reports that Israel and Lebanon agreed to implement a ceasefire and end hostilities raised hopes for a broader deal to de-escalate the US-Israeli conflict with Iran. However, Tehran denied recent progress in talks with Washington over an interim peace deal, and fighting continued in Lebanon. Meanwhile, the Republican-controlled US House voted to halt military action against Iran. On monetary policy, markets are now pricing in a near-certain 25-basis-point ECB rate hike at the June 11 meeting, with two or possibly three increases expected this year. This follows data showing euro-area inflation rose to 3.2% in May, its highest in over two and a half years. Core inflation also accelerated to 2.5%, and services inflation climbed to 3.5%, signaling broadening price pressures beyond energy.