News Maker 23

The Euro edged higher against the US dollar during Monday's US trading session (August 31). The EUR/USD pair traded around 1.1595—up approximately 0.11% for the day—as the US dollar struggled to sustain its gains following Friday's rally.

The US dollar had previously risen by about 0.55% after Federal Reserve official Kevin Warsh delivered a speech at the Jackson Hole symposium that was perceived as hawkish. Warsh emphasized that the 2% inflation target remains a firm commitment for the Fed and that the central bank still has work to do if core inflation does not move clearly enough toward that target.

The US Dollar Index (DXY) hovered around 99.55, having briefly touched 99.72—its highest level since August 14. The 10-year US Treasury yield also climbed to around 4.75%, a high not seen since January 2025, thereby continuing to support the greenback.

According to the CME FedWatch Tool, the market now assigns a roughly 61% probability to a Fed rate hike in September, up from 38% prior to Warsh's speech. These expectations limit the scope for Euro appreciation, even as the dollar begins to lose short-term momentum.

On the European front, preliminary German inflation data—which came in lower than expected—has not significantly altered market views regarding the European Central Bank's policy trajectory. Swap markets have almost fully priced in a 25-basis-point ECB rate hike to 2.50% at the September meeting.

Newsmaker Analysis: EUR/USD remains in a limited rebound phase, as support stemming from ECB rate-hike expectations is not yet strong enough to overcome the Fed's hawkish sentiment. As long as the DXY holds around the 99.50 level and US yields remain elevated, the Euro's gains could be capped below the 1.1650 area. Key focus areas for the week include Eurozone inflation data and the US Nonfarm Payrolls report. If the NFP is strong, the dollar could strengthen again; however, if labor data weakens, EUR/USD might find room to recover toward the 1.1650–1.1700 range. (asd)

Source: Newsmaker.id