Euro finds relief from softer US Dollar ahead of Fed minutes
- EUR/USD advances as the US Dollar eases from its recent highs.
- US yields remain elevated, keeping the broader Dollar backdrop supportive.
- France’s fiscal uncertainty and cautious ECB signals cap the Euro’s recovery.
EUR/USD trades on the front foot on Tuesday, drawing support from a modest pullback in the US Dollar (USD). However, concerns over France’s fiscal position keep the Euro’s (EUR) gains in check. At the time of writing, the pair trades around 1.1255, up 0.29% on the day.
The US Dollar eases as Treasury yields retreat, although the benchmark 10-year yield has recovered most of its intraday decline. It trades around 5.29% after dipping toward 5.25% earlier in the day, remaining close to Monday’s peak of 5.349%, its highest level since 2002. US yields remain elevated as persistent inflation risks, concerns over government debt and fiscal sustainability, and expectations that interest rates will remain high for longer weigh on the bond market.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.87 after climbing to a fresh year-to-date high of 102.53 on Monday.
On the monetary policy front, softer-than-expected Nonfarm Payrolls (NFP) and Personal Consumption Expenditures (PCE) inflation data released last week have reduced pressure on the Federal Reserve (Fed) to raise rates at its October 27-28 meeting.
The CME FedWatch Tool shows roughly a 78% probability of a hold this month, although the Fed’s commitment to bringing inflation back toward its 2% target keeps a December rate hike in play. Traders now await the Federal Open Market Committee (FOMC) meeting minutes, due on Wednesday, for clues on the Fed’s next move.
According to TD Securities, the policy backdrop is no longer providing incremental support for the Dollar. The bank argues that “we have likely already seen the peak in market pricing for Fed hawkishness, and the Fed is unlikely to hike beyond what the market has already priced in,” limiting scope for further upside from expectations of tighter policy.
In their view, “recent US data shows the Fed also cannot hike rates at a more accelerated pace than once per quarter to give the USD the additional boost from tighter monetary policy channel,” reinforcing the notion that “it is hard for us to see persistently bullish USD signals from the US data/ Fed channel alone.”
On the European side, France’s public finances remain a near-term concern as the government faces a difficult task in securing support for its 2027 budget in a divided parliament.
Meanwhile, cautious remarks from European Central Bank (ECB) officials add uncertainty over further monetary tightening. Speaking on Tuesday, policymaker Olli Rehn said, “We have not seen inflation spread to non-energy prices or wages.” He added that high long-term interest rates are slowing growth and limiting the pass-through of energy costs to other prices and wages.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.30% | -0.36% | 0.11% | -0.24% | -0.09% | -0.37% | 0.05% | |
| EUR | 0.30% | -0.12% | 0.37% | 0.04% | 0.22% | -0.09% | 0.35% | |
| GBP | 0.36% | 0.12% | 0.50% | 0.15% | 0.32% | 0.03% | 0.48% | |
| JPY | -0.11% | -0.37% | -0.50% | -0.33% | -0.18% | -0.45% | -0.02% | |
| CAD | 0.24% | -0.04% | -0.15% | 0.33% | 0.15% | -0.14% | 0.31% | |
| AUD | 0.09% | -0.22% | -0.32% | 0.18% | -0.15% | -0.30% | 0.16% | |
| NZD | 0.37% | 0.09% | -0.03% | 0.45% | 0.14% | 0.30% | 0.46% | |
| CHF | -0.05% | -0.35% | -0.48% | 0.02% | -0.31% | -0.16% | -0.46% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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