Fed's Triple Hike Risk Could Reshape EUR/USD Rate Gap
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EUR/USD faces a competing narrative from across the Atlantic, as economists flag the Fed's historical tendency to avoid stopping at a single rate increase. With a September hike already appearing likely amid elevated inflation and resilient U.S. growth, the potential for two additional moves is now firmly on the table.
A more aggressive Fed tightening path would widen the U.S.-eurozone rate differential just as the ECB debates its own hike, creating a tug-of-war that could keep EUR/USD volatility elevated through year-end.
Should the Fed's pace outstrip the ECB's, dollar strength may cap EUR/USD gains even if the pair holds above its 200-day MA, making the relative central bank trajectory the key swing factor for coming sessions.