The euro extended losses against the dollar Thursday, marking a fourth straight session of declines as the pair approaches yearly lows at 1.1330. The persistent pressure comes as market participants price in expectations for Federal Reserve rate hikes ahead of crucial US inflation data. Traders are awaiting the release of the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, which could provide critical direction for monetary policy decisions.
The dollar’s strength reflects growing investor conviction that the Fed may maintain its hawkish stance longer than previously anticipated. Currency markets remain highly sensitive to inflation indicators as they directly influence central bank policy trajectories. The EUR/USD pair’s proximity to annual lows signals significant bearish momentum, with the dollar benefiting from rate differential expectations between the Fed and European Central Bank.
FXnCO Insight
Position for potential EUR/USD volatility around PCE data release, with stops near 1.1330 support as a break lower could accelerate dollar strength and trigger additional euro selling pressure.
Source: FXStreet