U.S. dollar eases against euro

The euro gained 0.1% to $1.14755, after declining 0.7% on Wednesday, its largest drop since June 17

The U.S. dollar eased against the euro on Thursday, a day after logging ​its biggest jump in three months against the common currency after the central bank hiked rates and signalled further tightening.

The euro gained 0.1% to $1.14755, after declining 0.7% on Wednesday, its largest drop since June 17.

The U.S. dollar index was about flat on the day at 100.23 on Thursday.

The dollar’s retreat on Thursday was fuelled by a pullback from Wednesday’s surge, alongside lower Treasury yields and moderating oil prices.

I think that ​the dollar moves along with U.S. interest rates right now, said Marc Chandler, chief market strategist at Bannockburn Forex.

With Treasury yields ​easing after Wednesday’s rise, “the dollar corrects a little bit, Chandler said.

Though the central bank may have delivered on the market’s ⁠hawkish expectations for now, it might still not raise rates as aggressively as the market expects, making the dollar vulnerable to any disappointment.

Markets ​remain far more hawkish than the central bank. While policymakers project one more rate hike in 2026 and a hold in 2027, investors are pricing ​in more than one additional increase this year and around three more by the end of 2027.

The pendulum of sentiment has swung very far, Chandler said.

A drop in energy prices helped soften the dollar as reports of additional Saudi crude cargoes through Oman eased supply concerns amid the U.S. war on Iran.

The dollar tends to benefit ​from higher oil prices because the U.S. economy is seen as relatively less exposed to energy shocks.

Still, the dollar index remains around 1.4% higher ​than a week ago as markets have become increasingly convinced of the central bank’s resolve to tackle price pressures firmly.

Sterling, meanwhile, declined slightly against the euro and ‌the ⁠dollar after the Bank of England held rates unchanged but warned that prolonged war in the Middle East may require tighter policy. The British pound was last down 0.2% to $1.3354.