Euro Buoys as Dollar Struggles Amid Hawkish Expectations
The US Dollar is struggling to hold its ground as the Federal Reserve's hawkish expectations have yet to translate into gains for the currency. Despite this, the Euro has managed to recover from its intraday low, with EUR/USD trading virtually flat near 1.1623 during American trading hours on Tuesday.
The US Dollar Index (DXY) is hovering around 98.82, its lowest level in more than two weeks, as the Greenback fails to gain traction. Analysts at ING attribute this weakness to their expectation of a September Fed hike, with the bank maintaining a cautious stance on the currency pair.
The ECB's interest-rate decision on Thursday is also drawing attention, with markets fully pricing in a 25 basis point rate increase to 2.50%. The Eurozone inflation accelerated to 3.3% in August, largely due to higher energy prices, and traders will look for signs of whether policymakers are considering another increase after September or plan to pause.