Dollar Surges Against Euro on Strong US PMIs and Hawkish Fed Outlook
The US Dollar has gained strength against the Euro after strong US PMIs and hawkish Federal Reserve pricing weighed on EUR/USD. The composite PMI rose sharply to 58.4 in September, driving expectations for another Fed rate hike in October and pulling EUR/USD below 1.14.
The Danske Research Team highlights rising services input prices and tighter financial conditions as key drivers of US Dollar strength against the Euro. Services input prices are rising at their fastest pace since November 2022, pointing to price pressures that could be hard to explain by energy alone.
In contrast, the euro area's composite PMI surprised to the upside in September, reaching 53.1 - its highest level in more than three years. Services drove the increase, climbing to 53.0, while manufacturing held steady at 52.7.