Euro Dives to Two-Month Low as Interest Rate Fears Mount
The euro continued its downward trend, falling for the fifth consecutive day against the US dollar and reaching a two-month low on Friday. The currency's value dropped to $1.1368, down from its opening level of $1.1380. This marks a significant decline, with the euro now down around 1.1% against the US dollar for the week.
The drop in the euro's value is largely attributed to concerns over interest rate differentials between Europe and the United States. The European Central Bank's Governing Council has been divided on whether to continue normalizing monetary policy, leaving the prospect of an October interest rate hike uncertain. With the US Federal Reserve raising rates by 25 basis points last week to 4%, the interest rate differential between Europe and the US widened to 135 basis points in favor of US rates.
The US dollar index rose 0.1% on Friday, trading near its two-month high of 101.40 points, while the yield on the 10-year US Treasury note reached a 19-year high of 5.225%. Strong economic data showing growth in US manufacturing and business activity strengthened expectations for another US interest rate hike in October.