EUR/USD Holds Modest Gains as US Dollar Struggles on Hawkish Fed Expectations
The EUR/USD pair held modest gains on Monday during American trading hours as the US Dollar struggled to build on Friday's strength, which followed hawkish remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole Symposium.
Warsh signalled that the Fed may need to tighten monetary policy further and stressed that the central bank's 2% inflation target is 'firm'. He also noted that policymakers still 'have work to do' unless underlying inflation moves toward the target at a sufficient pace.
The US Dollar rose about 0.55% on Friday, reaching its highest level in more than a week, and the US Treasury yields surged following Warsh's speech, with the benchmark 10-year yield trading near 4.75%, its highest level since January 2025.
According to the CME FedWatch tool, markets are pricing in around a 61% chance that the Fed will raise interest rates in September, up from 38% before Warsh's remarks.