Euro extends downfall against US Dollar amid firm Fed hike bets

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 New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.25%	0.09%	0.06%	0.12%	0.24%	0.39%	0.25%
EUR	-0.25%		-0.16%	-0.18%	-0.13%	-0.01%	0.11%	-0.00%
GBP	-0.09%	0.16%		-0.02%	0.02%	0.14%	0.26%	0.15%
JPY	-0.06%	0.18%	0.02%		0.05%	0.17%	0.28%	0.16%
CAD	-0.12%	0.13%	-0.02%	-0.05%		0.12%	0.22%	0.13%
AUD	-0.24%	0.01%	-0.14%	-0.17%	-0.12%		0.11%	-0.02%
NZD	-0.39%	-0.11%	-0.26%	-0.28%	-0.22%	-0.11%		-0.11%
CHF	-0.25%	0.00%	-0.15%	-0.16%	-0.13%	0.02%	0.11%

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).

During press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% higher to near 101.55.

Fed’s monetary policy announced last week, under new Chairman Kevin Warsh, signaled a hawkish shift in policymakers’ stance amid high inflationary pressures. The Fed’s dot plot showed that nine of the 19 policymakers now believe the central bank needs to raise policy rates ‌this year. This is a sharp turnaround as not a single official supported the view of an interest rate hike in the previous projections report released in March.

According to the CME FedWatch tool, there is an almost 71% chance that the Fed will deliver an interest rate hike in the September policy meeting.

In the Eurozone, European Central Bank (ECB) officials still expect inflationary pressures to remain above the 2% target despite increased peace prospects in the Middle East.

“Uncertainty elevated despite peace prospects and inflation could stay above 2% into the first half of 2027,” ECB Chief Economist Philip Lane said on Tuesday.

Euro FAQs

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

What is the ECB and how does it impact the Euro?

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

How does inflation data impact the value of the Euro?

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

How does economic data influence the value of the Euro?

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

How does the Trade Balance impact the Euro?

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.