EUR/USD surges on stronger dollar

The EUR/USD pair is trading at 0.9783 at the time of writing versus Wednesday’s 0.97815 level. The pair edged up into the close on Wall Street by 0.12% as the US dollar pauses the soaring US yield environment and despite markets pricing in the Federal Reserve’s terminal rate of around 5%.

Risk sentiment has been indecisive this week. On Thursday, the US dollar found some relief on the comments by Fed’s Patrick Harker who said the central bank is not done with raising its short-term rate target amid very high levels of inflation.

Harker’s hawkish remarks sent yields to fresh highs, the strongest in a decade. He said the Fed has made disappointing progress at lower inflation and added that inflation in 2023 would fall to around 4% and 2.5% in 2024.

Bond yields rose, with the US 2-year note last seen paying 4.593%, up 0.75%, after reaching to the highest since 2008 at 4.614%. The US dollar weakened, with the DXY index last seen down 0.15 points to 112.85 having moved between a low of 112.16 and 113.09.