Euro rises to June highs as falling US Treasury yields weigh on US Dollar
EUR/USD climbs sharply on Wednesday, reaching its highest level since June as the US Dollar (USD) comes under fresh selling pressure following the US Treasury’s announcement that it will increase buybacks of longer-dated government debt.
The US Dollar experienced a decline on Wednesday as the Euro reached its highest level since June, following the US Treasury's decision to double the size of its liquidity-support buyback operations for longer-dated nominal coupon securities. The Euro/US Dollar (EUR/USD) pair traded around 1.1653, up 0.68% on the day, while the US Dollar Index (DXY) fell to its lowest level since June 1.
The US Treasury announced it would increase buybacks of longer-dated government debt, covering the 10-year to 20-year and 20-year to 30-year sectors, with the maximum size of each operation increasing from $2 billion to at least $4 billion. As a result, long-term US Treasury yields fell sharply, with the 30-year Treasury yield dropping by around 9 basis points to near 5.20%.
The Eurozone's economic data and the ECB's monetary policy outlook were also under scrutiny, with traders expecting the ECB to raise interest rates in September amid persistent concerns over energy-driven inflation.
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