Euro holds near one-month low against US Dollar ahead of Fed verdict
EUR/USD remains on the back foot on Tuesday as rising US Treasury yields support the US Dollar. However, the pair lacks strong follow-through selling as traders avoid placing large bets ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
On Tuesday, the Euro found itself near its lowest level against the US Dollar in nearly a month, with the pair trading around 1.1543. This decline was supported by rising US Treasury yields, which hit multi-year highs as traders awaited the Federal Reserve's (Fed) monetary policy decision. The Eurozone bond yield also reached a post-2009 high, driven by energy shocks from the Middle East war and rising oil prices.
The European Central Bank (ECB) had already raised interest rates twice this year, signaling potential for further tightening. Traders anticipate a 25-basis-point rate increase from the Fed, with a 92% probability according to the CME FedWatch Tool. A surprise hold could weaken the US Dollar, benefiting the Euro. The US Dollar Index (DXY) was up 0.11% on the day, close to a two-week high.
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