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Euro holds modest gains as dollar slips amid hawkish Fed repricing

EUR/USD was around 1.1595, while the 10-year Treasury yield hovered near 4.75% after Fed Chair Kevin Warsh signaled tighter policy may be needed.

Reported · Written up by our desk · Major Pairs

EUR/USD held modest gains during Monday trading in the United States, but the dollar struggled to extend Friday’s rise, when Fed Chair Kevin Warsh’s hawkish remarks at the Jackson Hole Symposium sparked renewed interest rate repricing.

FXStreet said the pair traded around 1.1595, up about 0.1% on the day, as the US Dollar Index (DXY) was near 99.55 after reaching 99.72, its highest level since August 14. The outlet also pointed to higher US Treasury yields following Warsh’s comments, with the benchmark 10-year yield around 4.75%, its highest since January 2025.

According to CME FedWatch, markets were pricing in about a 61% chance of a September rate hike, up from 38% before Warsh’s remarks. On the euro side, softer-than-expected preliminary German inflation did not shift expectations that the European Central Bank will raise rates next month, and strategists at Brown Brothers Harriman highlighted Tuesday’s Eurozone inflation data as key to assessing whether price pressures remain.

FXStreet added that rising energy prices linked to Middle East tensions are also fueling concerns that inflation could stay above central bank targets longer. The focus this week includes US economic data, particularly Friday’s Nonfarm Payrolls report, which could influence expectations for the next US policy decision.

Latest closeEUR/USD 1.159 ▼0.6%|Dollar index 99.68 ▲0.5%

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