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Euro edges higher as ECB hawkish hopes offset a softer US dollar
EUR/USD is holding around 1.1670 as oil prices, higher Eurozone bond yields, and Middle East tensions raise inflation-linked expectations for an ECB hike in September.
EUR/USD rose modestly in Asian trade, holding near 1.1670 after a slightly weaker session the prior day, as market pricing leaned toward a more hawkish European Central Bank stance, FXStreet reports.
The pair found support as rising oil prices, elevated Eurozone bond yields, and worsening Middle East tensions lifted concerns about inflation in the euro area. Expectations are building for the ECB to deliver a 25-basis-point rate hike in September after its June tightening.
At the same time, the US dollar faced pressure as sovereign yield moves reflected worries about Washington’s deficit spending and concerns the Federal Reserve could be too complacent about persistent inflation. FXStreet also points to US Treasury plans to double buyback operations for longer-dated bonds, with reporting that Treasury Secretary Scott Bessent could use nearly $1 trillion from the Treasury General Account to fund the program.
Looking ahead, attention is focused on a busy US events calendar, including consumer confidence data on Tuesday, the PCE price index on Wednesday, and a speech by Federal Reserve Chair Kevin Warsh on Friday at the Jackson Hole symposium, which could influence the dollar. Strategists at Scotiabank say event risk is significant and that the setup could support some moderate gains in the dollar in the short run as investors pare back positioning into the releases.
Latest closeEUR/USD 1.157 ▲0.4%