Euro Falls to Three-Month Low Amid Hawkish Fed Expectations
The Euro has fallen to its lowest level in three months as the US Dollar continues to strengthen. The EUR/USD pair is trading around 1.1331, down 0.35% on the day.
This decline comes despite weaker-than-expected US economic data released on Tuesday. However, traders remain focused on the inflationary impact of elevated Oil prices and the resulting hawkish Federal Reserve expectations.
The US Dollar Index (DXY) is trading at its highest level in two months, around 101.50. The CME FedWatch Tool indicates that markets are pricing in a 68% probability of another interest-rate increase at the Fed's October meeting.
Higher US yields have increased the appeal of Dollar-denominated assets and widened the interest-rate gap between the United States and the Eurozone, adding further pressure on EUR/USD. The European Central Bank is also expected to raise interest rates further this year due to elevated inflation risks.