Euro falls to three-month low against US dollar in Turkey — Anadolu Agency

In Turkey, on September 29, the euro exchange rate against the US dollar fell by 0.3% to $1.1332 per euro. This was the lowest level since June 24, when the EUR/USD pair traded at 1.1324. Anadolu Agency reports.

The European currency was affected by expectations of tighter US Federal Reserve policy to curb inflation, as well as rising energy prices in Europe. Geopolitical risks in the Middle East affecting energy supplies are further complicating the fight against inflation.

Fed rate expectations

Rising oil prices are increasing inflation risks and may force central banks to accelerate monetary policy tightening. Markets expect that the US Federal Reserve may raise rates once more by the end of the year and maintain a restrictive approach next year as well.

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The probability of a 25-basis-point Fed rate hike in October was estimated at 73%. At the same time, it remained unclear whether the regulator would keep the rate unchanged in December or raise it again. Further Fed decisions may be influenced by US employment and nonfarm payroll data, which are due to be released this week.

Difference in bond yields

Piotr Matys, senior currency analyst at In Touch Capital Markets, said that US and European bond markets were moving differently because of country-specific factors and fluctuations in oil prices. According to him, the widening yield differential in favor of the dollar was putting pressure on the EUR/USD pair.

Kit Juckes, head of foreign exchange strategy at Societe Generale, believes that the further short-term movement of EUR/USD will depend on US inflation, employment and ISM index data. In his view, the gradual decline of the euro against the dollar may continue as long as energy prices remain high.