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US Dollar Facing Its Weakest Month While Euro Hits A 3-Month High
The US Dollar Index is facing its steepest monthly drop in one year. Meanwhile, the Euro jumped to its highest since August 2023. Currently, a euro equals $1.10. As the market expects the Federal Reserve to cut interest rates, the dollar rate is decreasing.
According to Business Insider,
?The US Dollar Index, which measures the greenback against a basket of rival currencies, is on pace to weaken about 3% this month, its steepest 30-day drop since November last year. At the same time, the euro has moved in the opposite direction, toward its highest level against the dollar since August, advancing as much as 0.4% Tuesday to reach $1.10 for its fourth consecutive day of gains.?
In the month of October, the euro and the dollar were near parity, where the former?s value was $1.05. However, by November, the euro had gained about 3.6%.
The swing in the value of the currencies is due to the lowering of interest rates. The Federal Reserve had to cut down interest rates due to market expectations. The market actually expects the central bank of the United States to ease its monetary policy.
Last year, the value of the dollar increased since the Federal Reserve continued to raise interest rates. As a result, investors were driven to invest in Treasurys for higher yields.
On Tuesday, the Central Bank Governor Christopher Waller said that inflation is on track to fall to the 2% target. This will make it easier for the central bank to loosen its monetary policy after the market calls for rate cuts.
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