Geopolitical tensions in the Middle East and rising US Treasury yields drive investors toward the US Dollar, pressuring the Euro.
EUR/USD declined for a second straight session, trading near 1.1520 in Asian hours Friday as the US Dollar strengthened on safe-haven flows. Escalating tensions in the Strait of Hormuz, including proposed restrictions on US and Israeli vessels, heightened market uncertainty.
Eurozone Retail Sales contracted 0.3% month-on-month in June, missing forecasts for 0.1% growth and reversing May’s 0.4% gain. Meanwhile, US Treasury yields rose, fueling speculation of another Federal Reserve rate hike, though the CME FedWatch Tool shows a 54.5% chance of a 25-basis-point increase in September, down from 63.4% last week.
Investors are now focused on the upcoming US Nonfarm Payrolls report to assess labor market conditions and Fed policy expectations. Crude oil prices also rebounded, adding to inflation concerns.