Markets price in 35 basis points of Fed tightening by year-end, offsetting cooler Eurozone inflation data and capping the euro.
The EUR/USD pair remains steady at 1.1420, failing to extend gains as Federal Reserve rate hike expectations counterbalance softer Eurozone inflation. The US Dollar Index (DXY) rose 0.06% to 101.17, supported by speculation of further Fed tightening.
Money markets anticipate 35 basis points of policy tightening by year-end, with an 82% chance of a rate hike at the September meeting, targeting a 3.75%-4% range. US job vacancies unexpectedly increased in May, while consumer confidence edged higher in June despite labor market concerns.
Risk appetite improved as US equities closed higher, with geopolitical tensions easing amid US-Iran negotiations. Cleveland Fed President Beth Hammack indicated potential support for further rate hikes if inflation persists.