Euro Falls Below Mid-1.1500s vs Bullish Dollar Ahead of FOMC
The Euro (EUR) is under pressure, trading below mid-1.1500s against the US Dollar (USD), as the greenback retains its bullish bias ahead of the Federal Open Market Committee (FOMC) policy meeting.
According to market analysis, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, weighed down by firming US Federal Reserve (Fed) rate hike expectations and inflation risks stemming from higher energy prices.
In a warning sign, US Treasury yields are edging toward a key 5% threshold, with 10-year yields at 4.9%, according to Inning's Padhraic Garvey, who notes that these expectations 'could do with some treatment from the Fed in order to at least help contain them.'
The Middle East crisis is also keeping geopolitical risk premium in play, supporting crude oil prices and the USD.