Dollar on Track for Fourth Straight Weekly Gain Against Euro

The US dollar is poised to post its fourth consecutive weekly gain against the euro on Friday, supported by elevated Treasury yields in the face of a selloff in European government bond markets and expectations that the Federal Reserve will maintain its hawkish interest rate stance.

While data showed US job growth in September fell short of economists' expectations and the unemployment rate edged up to 4.2%, benchmark 10-year Treasury yields slipped before rising 5.14 basis points to 5.285%. However, the dollar remained underpinned by US yields hovering near multi-decade highs, concerns over Europe's fiscal outlook, and higher oil prices.

Some investors are reducing exposure to currencies of major energy importers, including the euro and yen, due to rising crude prices. The euro is on track for its fourth straight week of losses against the dollar, with its longest such stretch since mid-May 2025.

Nomura's Dominic Bunning said that despite job data being a 'Goldilocks set', resilient but not generating significant inflationary pressure, it has a relatively positive impact on risk assets and high-beta currencies. It also reduces the likelihood of another Fed rate hike in October, with markets pricing in an 86% chance of steady rates.