The euro trimmed earlier losses to trade around $1.162 after the European Central Bank raised interest rates as expected and upgraded its inflation and growth forecasts for the coming years. The ECB delivered its second rate hike since the US-Iran war began, warning that inflation is likely to remain well above its 2% target for an extended period. The central bank kept its 2026 inflation forecast at 3.0% but raised its projections for 2027 and 2028 to 2.5% and 2.1%, respectively. Meanwhile, GDP growth forecasts were upgraded to 0.9% for 2026 and 1.4% for 2027, reflecting greater-than-expected resilience in the euro area economy. The 2028 growth forecast was left unchanged at 1.5%.