According to UOB Global Economics & Markets Research, EUR/USD extended its recent decline as the US Dollar index hit a one-year high following the Fed’s hawkish hold. The pair closed at 1.1456, with Euro sentiment also shaped by comments from ECB Chief Economist Philip Lane on a potentially higher neutral rate and an ongoing energy-related price shock from the Middle East.

Euro slides as DXY hits one year high

"The US dollar extended gains on Thu to its highest in more than a year after a hawkish hold from the Fed triggered bets on rate hikes. The US dollar index (DXY) surged and closed at a one-year high at 100.85 (+0.76%). EUR/USD extended its sharp decline from the previous session to close at 1.1456 (-0.37%)."

"Speaking at an event on Thu, European Central Bank (ECB) Chief Economist Philip Lane said the neutral rate of interest could be as high as 2.5%, suggesting another hike will not yet act as a brake on the economy. Lane described the outlook as “stable,” while observing that the price shock caused by the snarl-up in energy supplies from the Middle East isn’t yet over."

"Risk sentiment improved modestly on Thu as markets continued to digest the Fed’s hawkish tilt alongside resilient US data. Firm labour and spending signals reinforced the higher-for-longer narrative, keeping front-end yields elevated and the US dollar supported."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)