The euro traded little changed around $1.145, hovering near its strongest level since June 19 and remaining on track for a weekly gain against the US dollar.

Expectations of further European Central Bank tightening continued to support the currency, while investors also monitored escalating tensions in the Middle East following additional US strikes on Iranian targets.

Markets fully price in an ECB rate hike in September, with another increase expected by spring 2027.

However, recent comments from policymakers including Piero Cipollone and Martin Kocher signaled a cautious approach, making a July move unlikely.

Meanwhile, the dollar weakened this week after softer-than-expected US inflation data, as producer prices unexpectedly fell in June and consumer prices posted their first monthly decline since 2020, reducing expectations for further Federal Reserve tightening this year.