The euro extends gains against the dollar on Fed rate cut bets and ECB hawkishness ahead of key PMI data.
The EUR/USD pair rose during Asian trading, approaching its highest level since May 14 as dip-buyers returned. Bulls now eye a break above 1.1700, with the pair set for strong weekly gains amid broad USD weakness.
The US Dollar Index (DXY) hovers near a three-month low as traders reduce bets on an immediate Fed rate hike following signs of cooling inflation. Meanwhile, expectations of ECB hawkishness due to energy-driven inflation pressures support the euro. Commerzbank warns that tight European gas storage could push prices higher if LNG imports fail to recover.
Market reaction to the US Treasury’s plan to expand long-dated debt buybacks has faded, with focus shifting to inflation risks from rising energy costs. The euro’s uptrend remains intact ahead of upcoming PMI releases.