EUR/USD Plunges as Hawkish Fed Signals and Eurozone Inflation Surge

The EUR/USD currency pair declined to 1.1578 on September 2, 2026, due to a complex interplay of factors.

Hawkish Federal Reserve signals and rising inflation in the Eurozone contributed to the decline, with the dollar's recent gains driven by comments from New York Fed President John Williams and Fed Chair Kevin Warsh.

Williams' remarks on September 2 indicated his openness to raising interest rates at the upcoming FOMC meeting, while Warsh suggested that further rate hikes might be necessary to tackle persistent inflation.

The ECB is also poised to raise its key deposit facility rate by 25 basis points to 2.50% at its meeting on September 10, but with cautious guidance, limiting euro upside potential.