The euro weakened further, slipping below 1.0450 against the U.S. dollar, as surging demand for the greenback pressured major currencies. A combination of hawkish Federal Reserve expectations and risk-off sentiment fueled the dollar’s gains, keeping the EUR/USD pair under pressure.
Investors sought safety in the U.S. dollar, supported by strong Treasury yields and economic resilience in the United States. Meanwhile, weaker eurozone data added to concerns about slowing growth, reinforcing expectations that the European Central Bank (ECB) may turn more cautious on future rate hikes. The policy divergence between the Fed and ECB has widened, further weighing on the euro’s outlook.
With the Federal Reserve maintaining a restrictive stance, traders have reduced bets on an imminent shift toward rate cuts. This has strengthened dollar demand, making it harder for the euro to recover despite persistent inflation concerns in the eurozone. Meanwhile, uncertainty over global trade and financial conditions has kept investors favoring safe-haven assets, further benefiting the U.S. dollar.
Looking ahead, markets will closely monitor U.S. economic data, particularly inflation and labor market reports, for signs of whether the Fed will maintain its higher-for-longer rate outlook. On the European side, any shifts in the ECB’s tone or policy direction could provide some relief, but for now, downside risks remain for the euro.
For now, EUR/USD remains on the defensive, with traders waiting for stronger catalysts to determine the pair’s next move. Without a major shift in market sentiment or central bank positioning, the euro is likely to remain under sustained pressure..
