Dollar Slumps on Rate-Cut Bets, Euro Surges to New Highs
The US dollar's value has declined against the euro in recent weeks, pushing EUR/USD to its highest level since late 2024. This shift is largely due to a combination of factors, including softer-than-expected US economic data and growing expectations for Federal Reserve rate cuts.
US retail sales for April came in below forecasts, while jobless claims rose more than predicted, signaling a cooling labor market. Additionally, inflation data released earlier in the month showed a slight easing, which has reinforced bets that the Fed could begin cutting rates as soon as September.
The European Central Bank's stance is also contributing to the dollar's decline, with policymakers emphasizing that euro area inflation remains sticky. This policy divergence has narrowed the yield gap between US and German bonds, making the euro more attractive to investors.