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The US dollar hovered near its highest level of the year against the euro on Wednesday, heading for its largest monthly gain against the European currency in 14 months.
Robust US economic growth and rising interest rates drove the greenback’s rally, starkly contrasting with European concerns over energy costs, high debt, and political stagnation.
The euro fell to $1.1312 overnight—its lowest point since May 2025—while European gas prices surged to multi-year highs and French market yields widened over German benchmarks due to election uncertainties.
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Beyond Europe, the surging US currency pushed several major counterparts to multi-month lows.
The Australian dollar dropped below 70 cents for the first time since early August, while the New Zealand dollar and British pound hit multi-month troughs.
In contrast, the Japanese yen gained 1.5 per cent against the dollar in September following rate hike acceleration and joint US-Japan market interventions in August, which discouraged investors from shorting the currency.
Traders now await key economic indicators, including the US core PCE inflation data and Friday’s non-farm payrolls report, to gauge future interest rate trajectories.
Although New York Fed President John Williams tempered immediate rate hike expectations, analysts expect strong US economic data to sustain the dollar’s upward momentum against global currencies.
