Euro Slumps as Risk Aversion and Fed Hopes Fuel Dollar Rally
The Euro has fallen to two-week lows against the US Dollar for the second consecutive day on Wednesday, weighed down by risk aversion amid escalating tensions between the US and Iran. The EUR/USD pair is trading at 1.1580, having been rejected at the 1.1620 area on Tuesday.
The attacks between the two nations have increased oil prices, with Brent Oil trading at $94.00, nearly 7% up on the week. This poses a significant challenge for the Eurozone's economies, which may see their growth dampened by rising energy costs.
US macroeconomic data disappointed on Tuesday, but failed to deter hopes of a Federal Reserve interest rate hike in September. The CME Group's FedWatch Tool shows a 68% chance of a rate hike later this month, nearly twice last week's 36% rating.