The euro rose in the European market on Monday against a basket of global currencies, extending its gains for the third consecutive day against the US dollar and hitting a nine-week high, amid strong demand for the single currency, especially after the likelihood of US interest rate hikes this year declined.
With renewed inflationary pressures on monetary policymakers at the European Central Bank, particularly those related to energy prices, the likelihood of a European interest rate hike in September has increased.
Price overview
Euro exchange rate today: The euro rose against the dollar by 0.45% to ($1.1614), its highest level since June 17, from today's opening price of ($1.1562), and recorded a low of ($1.1560).
The euro ended Friday's trading session up 0.35% against the dollar, its second consecutive daily gain, thanks to expectations of US interest rates.
The euro gained more than 0.1% against the dollar last week, its third consecutive weekly gain.
US dollar
The dollar index fell by about 0.4% on Monday, deepening its losses for the third consecutive session and hitting an 11-week low of 99.29 points, reflecting the continued decline in the US currency against a basket of major and minor currencies.
This decline in dollar levels comes after inflation data released last week in the United States showed that inflationary pressures on monetary policymakers at the Federal Reserve have slowed, leading to a decrease in the likelihood of a US interest rate hike this year.
According to the CME Group's FedWatch tool: the probability of the Federal Reserve keeping interest rates unchanged at its September meeting is currently priced at 70%, and the probability of a 25-basis-point rate hike is priced at 30%.
European interest rate
Amid rising oil prices, the money market's pricing in the likelihood of the European Central Bank raising European interest rates by about 25 basis points in September has increased from 35% to 50%.
In order to reprice those possibilities, investors are awaiting the release of more economic data in the Eurozone on inflation, unemployment and wage levels.
Euro performance forecast
Here at FX News Today, we expect the euro to continue moving in positive territory against the US dollar, with the possibility of recording new higher levels in several weeks, amid strong demand for the single European currency, especially with increasing hopes of a narrowing of the interest rate gap between Europe and the United States in the coming period.
