Euro Tumbles as Fed Hike Odds Rise, Iran-US Talks Stall
The Euro has posted modest losses against the US Dollar as traders increase their bets on another Federal Reserve rate hike. According to the CME FedWatch tool, markets are now pricing in nearly a 67.5% odds of an October benchmark rate hike, up from 55.4% a week earlier and 11% a month earlier.
Philadelphia Fed President Anna Paulson said that additional tightening could be needed if the economy continues to evolve as expected. She added that inflation remains well above the Fed's 2% target.
The uncertainty surrounding US-Iran negotiations and ongoing Middle East conflicts could boost safe-haven flows, supporting the Greenback and acting as a headwind for the Euro. Oil prices have risen, the US economy remains resilient, and Fed policymakers deliver hawkish remarks.