The Euro climbs to its strongest level since June 17, driven by a weaker USD amid easing expectations for Federal Reserve tightening.
The EUR/USD pair extended its rally to a fifth consecutive session, reaching mid-1.1500s in Asian trading, its highest level since June 17. The move follows a retreat in the US Dollar Index (DXY), which has pulled back from year-to-date highs as traders scale back bets on aggressive Federal Reserve rate hikes.
The shift comes as crude oil prices decline, reducing inflationary pressures and tempering expectations for extreme Fed tightening. OPEC+’s decision to boost production in September and geopolitical developments in the Middle East have further weighed on oil markets. Analysts at Brown Brothers Harriman suggest the USD’s rally from May has exhausted its momentum, with the DXY now poised to retreat into a 96.00-100.00 range.
Policy concerns are also emerging, with doubts over the Fed’s ability to translate tough inflation rhetoric into credible action. This has raised risks of the central bank falling behind the curve in containing inflation, adding to the USD’s downward pressure.