Euro approaches yearly lows at 1.1324 against an unstoppable US Dollar

The Euro (EUR) continues to decline throughout Tuesday, propelled by a combination of elevated US Treasury yields, robust US economic data, and anticipations of additional Federal Reserve (Fed) rate hikes. The EUR/USD currency pair sits at 1.1338, just above the yearly lows of 1.1324, and is projected to decline by 2.4% in September.

Eurozone statistics released earlier in the day did not offer substantial backing for the shared currency. The Conference Board's Consumer Confidence Index revealed preliminary data indicating a decline to -16.5 in September from -15.5 in August, while the Economic Sentiment dropped to 97.9 from 98.4 in August. Industrial Confidence rose to -3.8 from -5, and the Services sentiment increased to 6.1 from 5.6 in August.

Furthermore, Peter Kazimir, a Eurozone board member and President of the National Bank of Slovakia (NBS), stated that a September rate hike is inevitable but requested more flexibility and hinted at a possible monetary policy adjustment in January. Conversely, the US Dollar (USD) is outperforming its counterparts, supported by robust fundamentals, elevated US Treasury yields, and increasing bets that the Federal Reserve will further tighten its monetary policy at least once more before the year's end.

OCBC analysts note that recent US jobless claims have been consistently falling, suggesting that labor market conditions remain strong and escalating the "risk of an upside payrolls surprise." They argue that a better-than-anticipated employment report would bolster expectations of additional Fed tightening, sustain Treasury yields, and offer further support for the USD.