Euro Stumbles as Hawkish Fed Sentiment and High Yields Weigh
The Euro struggles against the US Dollar as rising Treasury yields and hawkish Fed expectations drive up the value of the Greenback. The EUR/USD pair is trading at around 1.1368, down 0.20% from earlier in the day, and nearing levels last seen in June.
US-Iran tensions are keeping oil prices elevated, pushing US Treasury yields higher and supporting expectations of further Federal Reserve rate hikes. Markets see a 70% chance of another Fed rate hike in October, according to CME FedWatch.
ECB President Christine Lagarde flagged upside inflation risks and downside growth risks, saying that 'We still see upside risks to inflation and downside risks to growth.' Despite this, expectations of continued ECB tightening have done little to support the Euro. Analysts at HSBC argue that the Euro remains vulnerable to uncertainty over the European Central Bank's appetite to raise rates.