Euro rises to June highs as falling US Treasury yields weigh on US Dollar

EUR/USD surged to its highest level since June, rising about 0.68% to around 1.1653 as the US dollar weakened broadly. The move was driven by the US Treasury’s plan to at least double buybacks of longer-dated government debt, which pushed long-term Treasury yields lower and reduced support for the dollar. The 30-year yield fell roughly 9 bps to near 5.20% after topping 5.30% the prior day, its highest since 2007. Softer US economic data has also led traders to scale back expectations for another Fed rate hike, while the market now awaits FOMC July minutes for guidance on policy. On the euro side, expectations remain for an ECB rate increase in September, supported by persistent inflation concerns and confirmed Eurozone July core HICP at 2.5% YoY. Overall, the article is bullish for EUR/USD due to widening policy and yield differentials.