Geopolitical risks and Fed rate expectations drive the Euro lower against the Dollar ahead of key economic data releases.
The EUR/USD pair fell to near 1.1515 in early Asian trading on Friday, pressured by escalating Middle East tensions and risk-off sentiment. Iranian threats and a new international coalition to secure Red Sea shipping lanes heightened concerns over prolonged regional conflicts, weighing on the Euro as investors sought safer assets.
The US Federal Reserve held interest rates steady at its July meeting, but traders remain skeptical about the Fed’s commitment to controlling inflation. Markets now price a 63.4% chance of a September rate hike, down from 77% before the meeting, according to the CME FedWatch tool. Later Friday, the Eurozone’s July HICP and US Michigan Consumer Sentiment Index will provide further direction.
The Dollar’s strength reflects shifting rate expectations, though uncertainty persists over the Fed’s next moves. Geopolitical risks continue to dominate sentiment, keeping pressure on risk-sensitive currencies like the Euro.