Foreign Exchange Market Update

March 17, 2026

Eurozone

Euro traded at 1.1526 against USD at 9:00 AM PST

German investor confidence declined in March as the escalating Middle East tensions challenged economic recovery and posed a risk to inflation. The investor sentiment index declined to -0.5 from +58.3 in February. The score hit its lowest since April 2025 and remained well below the expected score of +38.7.

The escalation in the Middle East spikes energy prices and increases inflationary pressure. This heightens the risk for the German economy that the emerging trend of economic recovery will slow down.

Economic confidence in the Eurozone also plummeted into negative territory. The economic confidence index plunged by 47.9 points to -8.5 in March. Similarly, the current situation indicator slid 16.3 points to -29.9 in March. 03/17/2026 - 06:59:00 (RTTNews)

Consumer price inflation in Italy increased in February to the highest level in five months. Consumer price inflation accelerated to 1.5% in February from January's 1.0%. Nonetheless, this was the slowest inflation rate since September 2025, when prices had risen 1.6%.

The increase in inflation was primarily driven by the trend in prices for transport-related services, where prices grew 2.9% versus only a 0.7% increase in January.

The annual price growth in unprocessed food items accelerated to 3.7% from 2.5%, while that in processed food eased to 1.4% from 1.9%. On the other hand, the decline in energy products deepened to 11.6% from 9.6%. Monthly, consumer prices moved up 0.7%.

The E.U. measure of inflation, the harmonized index of consumer prices (HICP), rose at a faster pace of 1.5% annually in February, following a 1.0% increase a month ago. Monthly, the HICP increased 0.5%. 03/17/2026 - 06:19:00 (RTTNews)

Australia Raises Key Interest Rate for Second Straight Time

The Reserve Bank of Australia (RBA) lifted its benchmark rate for the second straight time as the conflict in the Middle East poses a material risk to inflation. In a close call, the policy board, governed by Michele Bullock, decided to hike the cash rate target by 25 basis points to 4.10%.

The decision was made by a majority vote, with five members voting to raise the rate and four seeking to hold it at 3.85%. This follows the RBA's previous 25-basis-point hike in February, which was the first increase since November 2023.

Policymakers noted that the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation. Short-term measures of inflation expectations have already increased. Globally, the war in Iran poses substantial risks in both directions. 03/17/2026 - 01:39:00 (RTTNews)