Euro Plunges to Monthly Lows Amid High Oil Prices and Fed Hike Bets
The Euro (EUR) has dropped to its lowest level in a month against the US Dollar (USD), trading below 1.1550 at the time of writing. This decline is attributed to risk-averse markets, with Oil prices above $100 and increasing hopes of a Federal Reserve (Fed) rate hike on Wednesday.
The EUR/USD pair has extended its reversal from last week's highs of 1.1650, weighed down by Brent Oil trading near $104.00. This surge in oil prices poses a significant challenge to the Eurozone's economic growth and adds pressure on the European Central Bank (ECB) to tighten monetary policy further.
Fed hiking bets have surged following August's CPI data, which showed core inflation rose at its fastest pace in two months. Analysts at MUFG/BTMU warn that if the Fed does not address upside inflation risks, it could trigger a sharp sell-off for the US Dollar and long-term US Treasuries.