Euro Surges Past Four-Week Highs Amid Fading Rate Hike Expectations
The Euro to Dollar exchange rate has reached four-week highs above 1.1580 due to fading expectations of a September Federal Reserve rate hike.
Despite concerns surrounding European gas prices, which are above €60/MWh, and the continued disruption through the Strait of Hormuz, the EUR/USD advanced to its current high.
UBS expects the Euro to Dollar exchange rate will strengthen to 1.20 by the second quarter of next year, while ING commented that better hard activity data and eurozone economic numbers have failed to provide a significant lift to the Euro.
ING noted that European natural gas prices are keeping the region's improving economic outlook at risk, but the bank still sees the Euro as slightly undervalued, with its short-term fair value sitting in the 1.160-1.1650 area.