Dollar Strengthens Against Euro as Yen Rebounds Amid Rate Hike Expectations

The US dollar has gained strength against the euro in recent days, pushing the EUR/USD exchange rate from around 1.17 to 1.16 as investors increasingly bet on a September rate hike in the United States.

Market-implied odds have risen from about 35% a week ago to more than 60%, indicating a higher probability of a Federal Reserve increase.

The euro area, however, remains more stable, with markets assigning a high probability to another ECB rate hike.

The dollar's advantage is not guaranteed, as Friday's US labour-market data may become the key catalyst. Weak employment figures could reduce expectations for a Fed hike and trigger profit-taking in the US currency.