Euro Faces Third Straight Weekly Decline Amid Hawkish Fed Outlook

The Euro is poised for its third consecutive weekly decline as hawkish Federal Reserve expectations and elevated US Treasury yields continue to support the Greenback. The EUR/USD pair rose slightly on Friday, but still remains on track for a third straight weekly loss. At present, it trades around 1.1400 after falling to 1.1359 on Thursday, its lowest level since July 28.

The US Dollar's rally this week has been driven by growing expectations that the Federal Reserve could raise interest rates again after delivering a 25-basis-point hike last week. Recent comments from Fed officials have encouraged traders to increase October rate hike bets, pushing yields and the US Dollar higher. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101 after reaching 101.40 on Thursday, its highest level in nearly two months.

Next week's US data, including the Personal Consumption Expenditures (PCE) inflation report and Nonfarm Payrolls (NFP) report, will be closely watched for clues about future policy decisions. The European Central Bank has already raised interest rates twice this year, but policymakers continue to stress a meeting-by-meeting approach.