EUR/USD Pauses as USD Seeks Fresh Leg Up Amid Inflation Fears

The EUR/USD pair pulled back in late August, settling below 1.1600 after a comeback by the US Dollar, which had been experiencing steady losses throughout the month.

The recovery was largely seen as corrective, with the pair holding above its monthly low at 1.1350 but closer to its peak at 1.1710.

The Middle East war had previously driven up energy prices and inflationary pressure, contributing to the USD's strength between March and July.

Fed Chair Kevin Warsh has pledged to tame inflation, but his words have yet to be matched by action, despite inflation nearly doubling the Fed's goal. The Fed kept interest rates on hold, with some attributing this decision to President Trump's demand for lower rates.