US Dollar Surges as Euro Falters Amid Energy Crisis and Political Uncertainty
The US dollar is experiencing a surge due to strong economic indicators and expectations of further monetary tightening by the Federal Reserve. The US PMI has reached its highest level since 2021, and there's a 70% chance that interest rates will be raised in October. This has led to an increase in Treasury bond yields, causing the EUR/USD pair to plummet.
Europe is facing significant challenges, including a deepening energy crisis and a political crisis in France. Diesel prices have risen 135% since the start of the year, and low gas storage levels are drawing comparisons with the 2022 energy crisis. The situation is further complicated by potential ECB intervention in the eurozone debt market.
Despite strong PMI figures and hawkish comments from FOMC officials, the European economy appears to be struggling. The EUR/USD pair has easily reached its first bearish target of 1.14, with 1.13 remaining as the next target. Short trades can be opened with targets of 1.13 and 1.12.