The euro returned to below $1.13, thanks to a stabilization in US rates (no rate cut last Wednesday) and despite a backdrop of persistent uncertainty regarding US trade policy, which undermined investor confidence in US assets. This follows several recent monetary policy moves, as investors assess the potential impact of tariff hikes on the global economic outlook and inflation expectations.

On the policy front, money markets are anticipating the ECB's deposit facility rate at 1.6% by year-end, reflecting signals from the ECB that it may cut rates further to support economic growth, despite stronger-than-expected inflation data.

Meanwhile, the US Fed kept rates unchanged on Wednesday, but warned that President Trump's tariffs could lead to higher prices, slower growth and higher unemployment if they continued.

In the UK, the Bank of England cut its key rate by 25 basis points to 4.25% after a split vote, with policymakers citing the global trade war and persistent weakness in the domestic economy.