The Euro declined against the Dollar after the Fed’s hawkish stance lifted the DXY index to its highest level in a year.
EUR/USD dropped 0.37% to 1.1456 as the US Dollar index (DXY) surged to a one-year high of 100.85, up 0.76%. The move followed the Federal Reserve’s hawkish hold, reinforcing expectations of prolonged higher US interest rates.
The Fed’s stance, combined with resilient US labor and spending data, bolstered the Dollar’s strength. Meanwhile, ECB Chief Economist Philip Lane suggested the neutral rate could reach 2.5%, but ongoing energy price shocks from the Middle East weighed on Euro sentiment.
Markets digested the Fed’s policy shift, with front-end yields remaining elevated and risk sentiment showing modest improvement.