Euro remains depressed amid strong US macroeconomic data and higher Oil prices

The Euro experienced a decline against the US Dollar on Thursday, trading near the lowest level in two months as US economic indicators strengthened. The US Purchasing Managers Index (PMI) report revealed business activity surged at its highest pace in over five years, with job growth and wage gains accelerating, and input prices rising due to higher energy costs.

This data suggested the US economy might be overheating, prompting Fed Governor Michael Barr to warn of "further rate hikes" to rein in inflation. A weak performance at a five-year US Treasury auction also sent yields soaring to their highest levels in 19 years, bolstering the US Dollar. Meanwhile, crude oil prices rose about 5% from Tuesday's lows, nearing the crucial $100 mark and adding pressure on the Eurozone's economic growth and inflation.

Analysts predict this trend will continue as strong US economic performance supports the US Dollar. The Federal Reserve aims to balance price stability and full employment through interest rate adjustments. When inflation exceeds 2%, or unemployment is too high, the Fed raises rates, strengthening the Dollar. Conversely, when inflation falls below 2% or unemployment is high, the Fed lowers rates to encourage borrowing, weakening the Greenback.

The Federal Open Market Committee (FOMC) meets eight times a year to assess economic conditions and make policy decisions.