The euro extended its advance to a fourth straight session, trading near 1.1680 against the dollar as the greenback continues to soften in the wake of the US Treasury’s expanded bond buyback program.
EUR/USD climbed near 1.1680 in Asian trading, continuing a run that began earlier in the week once the Treasury confirmed it would at least double buybacks of longer-dated debt, with officials indicating purchases could rise beyond $4 billion per operation. The stated goal is to contain rising yields, but the byproduct has been a broadly softer dollar that’s lifted the euro alongside other major currencies.
On the euro’s own side of the ledger, support has also come from shifting inflation expectations. Eurozone consumer inflation expectations for the coming year eased to 2.9% from 3% previously, still above the European Central Bank’s 2% target but moving in a direction that gives the ECB some room to maneuver without appearing to fall behind the inflation curve.
The advance hasn’t been entirely one-sided, though. Escalating US-Iran tensions have offered some counterbalancing support to the dollar as a safe haven, with Tehran rejecting a fresh round of proposed US sanctions and warning of what it called “earthquake-like” retaliation should Washington proceed. That geopolitical backdrop remains a wildcard that could quickly reverse the euro’s current momentum if tensions escalate further.
Disclaimer: The content provided on this page is for informational and educational purposes only and does not constitute financial advice. Trading financial markets involves significant risk. Consult with a certified financial advisor before making any investment decisions.
Learn More
Understand How Inflation Expectations Move Currencies
See how central bank inflation targets like this factor into EUR/USD moves in the FXM680 Forex Academy.