In the same note, Societe Generale’s Kit Juckes describes EUR/USD as a near‑mirror of the Dollar Index, reflecting the Dollar’s past weakness under President Trump and its current recoupling with relative interest rates. He points out that EUR/USD is reacting to stubborn US inflation, resilient growth and a less dovish FOMC, as the Dollar tests 12‑month highs.

Pair reflects Dollar recoupling dynamics

"Whether I look at the Dollar Index, or its near-mirror, EUR/USD, it’s very easy to see the influence that President Trump had on the dollar last year, weakening relative to where the economy and monetary policy settings might have been expected to take the dollar."

"It’s equally easy to see that gradually, the dollar is recoupling with relative rates."

"This could change again, of course, but on a morning after stubborn inflation and resilient growth persuaded the FOMC, and its new Chairman, to deliver a significantly less dovish message than many expected, the dollar is testing 12-month highs."

"Our economists’ central case is that Fed rates will be on hold throughout this year, but high (and sticky) inflation, and a booming equity market, will..."

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