EUR/USD has fallen to its lowest levels this year, pressured by a hawkish reassessment of Federal Reserve policy and widening French OAT-Bund spreads, according to FX Street (ING). Despite easing inflation in the US, the Federal Reserve's stance has kept the dollar strong, intensifying downward pressure on the euro.
FX Street (MUFG) noted that the US Dollar extended its gains with the Dollar Index reaching around 101.80 year-to-date in June, even as softer inflation data and revised core PCE figures suggest slower underlying price pressures. This reduces the chance of aggressive Fed rate hikes but has not yet weakened the dollar's momentum.
Meanwhile, FX Street (Commerzbank) highlighted political risks in France, Spain, and Italy as additional factors weighing on the euro, though these risks have triggered only limited foreign exchange market reactions. For Japanese investors, the persistent strength of the dollar and euro volatility underscore the importance of monitoring Fed policy shifts and European political developments amid ongoing global market uncertainties.