EUR/USD Soars as Fed Holds Rates, Dollar Weakness Continues
The EUR/USD exchange rate rose to its highest level since June 17 as the US dollar continued to weaken following the Federal Reserve's decision to keep interest rates unchanged at 3.50%-3.75% on Wednesday.
The decline in the dollar was also attributed to suspected Japanese interventions aimed at strengthening the Yen, which further contributed to the broader dollar selling pressure.
On Thursday, the EUR/USD pair reached near 1.1534, surpassing its previous high since June 17. Meanwhile, the US Dollar Index (DXY) hovered around 100 and dropped by 0.80% on the day.
The soft US economic data released this week also weighed on the dollar. Annualized GDP growth in Q2 came in at 1.5%, below the forecasted 2.1%. The Core PCE Price Index rose 0.1% month-on-month, compared to a 0.2% estimate and 0.3% previously.
The Eurozone's surprise 0.4% growth in Q2 has reignited expectations that the European Central Bank (ECB) will hike rates in September. Traders are monitoring option implied volatility, which is rising as both the Fed and ECB head towards their highly anticipated autumn meetings.