Euro gains against US Dollar as post-Fed rally loses momentum
- EUR/USD recovers modestly as the US Dollar trims part of Wednesday’s Fed-driven advance.
- Expectations of another Fed rate hike limit selling pressure on the US Dollar.
- ECB officials warn of upside inflation risks, supporting expectations of more tightening.
EUR/USD trades modestly higher on Thursday as falling Oil prices pull US Treasury yields away from their recent highs, prompting the US Dollar to trim part of its post-Fed gains. At the time of writing, the pair trades around 1.1492, up 0.24% on the day, hovering near levels last seen on July 31.
West Texas Intermediate (WTI) Oil trades around $95.50, down nearly 2% on the day, as Saudi Arabia’s rerouting efforts and hopes for a faster recovery of its key pipeline following last week’s drone attacks ease supply concerns. Meanwhile, Reuters reported, citing three Iranian sources, that China has privately asked Iran to help stop Houthi attacks following an appeal from Saudi Arabia. The benchmark 10-year US Treasury yield falls to around 4.94%, below the 5.04% level touched earlier this week, its highest since 2007.
The US Dollar strengthened sharply on Wednesday, climbing to a seven-week high as Treasury yields rose following the Federal Reserve’s monetary policy decision. The central bank unanimously raised its benchmark rate by 25 basis points to 3.75%-4.00%, delivering its first increase since 2023. Updated projections showed that 16 of 18 policymakers expect at least one more quarter-point increase by the year-end.
According to the CME FedWatch Tool, traders see around a 50% chance of another rate increase in October. Expectations of additional Fed tightening limit the US Dollar’s downside and keep the EUR/USD recovery capped, even as markets also price in more tightening from the European Central Bank (ECB).
Weekly US labour market data released earlier also offered some support to the Greenback. Initial Jobless Claims fell to 196K from 206K, beating market expectations of 208K. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 100.08 after touching an intraday high of 100.37, its strongest level since July 31.
On the Euro side, final August inflation data showed that headline HICP was revised slightly lower to 3.2% annually, while core inflation held at 2.4%. ECB Governing Council member Gabriel Makhlouf said on Thursday “Risks to inflation remain on the upside,” adding that policymakers “can’t rule out anything at future meetings.” Meanwhile, Olli Rehn said last week’s rate hike was warranted and described the inflation outlook as “somewhat mixed,” while noting that the Eurozone economy has shown resilience and that there are no signs of second-round effects so far.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.25% | 0.07% | -0.39% | -0.09% | -0.43% | -0.51% | -0.37% | |
| EUR | 0.25% | 0.32% | -0.11% | 0.16% | -0.21% | -0.22% | -0.10% | |
| GBP | -0.07% | -0.32% | -0.42% | -0.15% | -0.51% | -0.55% | -0.41% | |
| JPY | 0.39% | 0.11% | 0.42% | 0.24% | -0.06% | -0.16% | -0.02% | |
| CAD | 0.09% | -0.16% | 0.15% | -0.24% | -0.33% | -0.40% | -0.24% | |
| AUD | 0.43% | 0.21% | 0.51% | 0.06% | 0.33% | -0.05% | 0.06% | |
| NZD | 0.51% | 0.22% | 0.55% | 0.16% | 0.40% | 0.05% | 0.18% | |
| CHF | 0.37% | 0.10% | 0.41% | 0.02% | 0.24% | -0.06% | -0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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