EUR Surges to Two-Month High as USD Struggles Amid Receding Fed Hike Bets
The EUR/USD pair has reached a two-month high after a three-day rally, with spot prices boosted by a broadly weaker US Dollar. The momentum follows last week's bounce from the 1.1500 psychological mark, as investors await a move beyond the 1.1600 round figure.
Recent weak US data, including a 0.6% decline in retail sales in July, has tempered bets for an immediate rate hike by the Federal Reserve. Strategists at Scotiabank argue that the steepening US 2/30s yield curve, reaching 108bps, reflects investor concern about the Fed policy outlook and weak US fiscal dynamics.
The European Central Bank's expected one final 25-basis-point rate hike in September is supporting the shared currency. However, inflation fears stemming from volatile oil prices may limit aggressive bearish bets on the USD. The market focus shifts to the release of FOMC Minutes on Wednesday, which will influence USD price dynamics and create short-term trading opportunities.