Euro Surges to Nine-Week High as US Interest Rate Hopes Dim

The euro continued its upward trend on Monday, reaching a nine-week high against the US dollar. The currency rose 0.45% to $1.1614, its highest level since June 17, as expectations for a US interest rate hike this year declined.

According to the CME FedWatch Tool, markets currently price a 70% probability that the Federal Reserve will leave interest rates unchanged at its September meeting, while the probability of a 25-basis-point rate hike stands at 30%. This has led to increased expectations for a European interest rate hike in September, with money-market pricing increasing from 35% to 50%.

The euro's strong demand is also driven by rising oil prices and upcoming economic data on inflation, unemployment, and wages. The eurozone's economic indicators are expected to have an impact on the European Central Bank's decision-making process in September.