EUR/USD pares earlier gains on Friday as the widening Middle East war and hawkish Federal Reserve (Fed) expectations keep the US Dollar (USD) pinned near recent highs.
At the time of writing, the pair trades around 1.1377, hovering near a three-week low after retreating from an intraday high of 1.1401
The Greenback also draws support from stronger business activity data. The preliminary S&P Global Composite Purchasing Managers’ Index (PMI) rose to an eight-month high of 53.6 in July from 51.9 in June, while the Services PMI climbed to 53.6 from 51.2. The Manufacturing PMI edged down to 53.8 from 53.9.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.42, recovering from an intraday low of 101.25. Meanwhile, West Texas Intermediate (WTI) is up nearly 8% this week as the Middle East war threatens shipping through two major energy routes, the Strait of Hormuz and Bab el-Mandeb. Elevated Oil prices keep inflation risks alive and reinforce expectations that the Fed may need to raise interest rates.