Euro Slides as Treasury Yields Rise, Inflation Concerns Linger

The euro slid against a mixed dollar on Monday as rising Treasury yields driven by inflation and debt-supply concerns weighed on risk sentiment. ECB President Christine Lagarde downplayed euro zone inflation concerns, stating that inflation has yet to trigger significant second-round effects.

Despite this, Fed Governor Lisa Cook warned that AI-driven demand and higher oil prices will likely keep inflation pressures elevated in coming months, though she did not signal a need for further rate hikes. Treasury Secretary Scott Bessent appointed David Zervos as counselor.

The DXY rose in active month-end trading, but gains were tempered as bullish dollar option sentiment eased. EUR/USD hit a two-month low at 1.1353 before recovering, with bearish momentum below key moving averages keeping risks tilted toward 1.1350 and resistance near 1.1400.

UK finance minister John Healey emphasized the importance of fiscal discipline in his upcoming Oct. 28 budget, citing rising debt-servicing costs as a drain on public spending. BoE Deputy Governor Dave Ramsden noted that persistent inflation has strengthened the case for keeping rates higher for longer.