Euro Hits Two-Month Low Amid Interest Rate Differential Pressures
The euro fell to a two-month low against a basket of global currencies in European trading on Thursday, extending its losses against the US dollar for a fourth consecutive day.
The decline was attributed to negative pressures, particularly those related to interest rate differentials between Europe and the United States. The European Central Bank's upcoming decision on interest rates has investors divided over whether it will raise rates at its October meeting.
With markets awaiting key economic data from the Eurozone for clearer signals on the monetary policy outlook, the euro fell more than 0.1% against the dollar to $1.1369, its lowest level since July 28. The US Dollar Index rose 0.1% on Thursday, extending gains for a fourth consecutive session and approaching a break above its two-month high of 101.23 points.
The yield on the 10-year US Treasury note also rose 0.25% on Thursday, providing further support for the US dollar. This move came after more hawkish comments from Federal Reserve officials combined with strong economic data showing growth in US manufacturing and business activity, strengthening expectations for another US interest rate hike in October.