Euro Surges to Three-Month High on Weak Dollar and ECB Rate Hike Expectations

The Euro has reached a fresh three-month high against the US Dollar at 1.1710, driven by the weak dollar and expectations of an interest rate hike from the European Central Bank in September.

Analysts point to the US Treasury's decision to pace up its long-maturing bond-buying operations as one factor weighing on the dollar, while receded hawkish Fed bets have also contributed to its decline.

The ECB is widely expected to raise interest rates at its next meeting, with markets pricing in a 26bps hike with over 90% probability. This has entrenched expectations of an ECB rate hike for September and strengthened the Euro.