The EUR/USD currency pair declined to near 1.1160, marking fresh 17-month lows as French political and fiscal uncertainties weigh on the Eurozone, according to FX Street. European bond market turbulence has heightened expectations for a more dovish European Central Bank (ECB) stance, adding further pressure on the euro.
Meanwhile, the US Dollar remains supported by robust US economic data and expectations of further Federal Reserve rate hikes. September’s ISM services and manufacturing indexes indicate resilient economic growth, with rising Prices Paid suggesting intensifying inflationary pressures, FX Street (Brown Brothers Harriman) reported. Despite softer labor data, markets are pricing in over three Fed hikes, though OCBC expects only a moderate USD rally into year-end.
For Japanese investors, these developments highlight the ongoing volatility in FX markets driven by divergent monetary policies and political risks, emphasizing the importance of closely monitoring both US and Eurozone economic signals.