EURUSD Dives as US Yields Soar, Geopolitical Tensions Flare

The EURUSD pair experienced a decline on August 18, 2026, as the US dollar strengthened against the euro. The pair slipped to 1.1576, marking a modest 0.15% decrease.

The surge in US Treasury yields played a significant role in the dollar's rally. On August 18, the 30-year Treasury yield breached 5.33%, reaching levels unseen since 2007 and hitting multi-decade highs. The 10-year yield also climbed above 4.74%. These higher yields made dollar-denominated assets more attractive to investors.

The increase in US yields reflects expectations of sustained or tighter monetary policy from the Federal Reserve, despite some recent softer US economic data. Market strategist Patrick Munnelly noted that the narrowing of diplomatic off-ramps in the Middle East adds significantly to market unease, contributing to the flight to safety.