EUR/USD Tumbles Amid Soaring US Economic Data and Hawkish Fed Expectations
The EUR/USD pair slid to a two-month low of 1.1378 on Thursday, as strong US economic data boosted expectations of further Federal Reserve tightening and lifted dollar demand.
Firm US macro data from S&P Global showed private sector business activity growing at its fastest pace in over five years in September, with services and manufacturing both improving while price pressures strengthened.
Fed officials reiterated support for the recent rate rise and flagged inflation risks, sending markets lifting the implied chance of another hike in October to around 70% from 55% a day earlier. Oil prices also contributed to the inflation narrative, with uncertainty surrounding US-Iran talks keeping prices elevated at near $85 a barrel.
Derivative traders are advised to closely monitor federal funds rate expectations and focus on positioning for a stronger greenback due to the persistent hawkish outlook.