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Euro Plunges to Two-Month Low as Traders Bet on Further Weakness Post-Fed Hike
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CNBC TV18•23-09-2026, 13:33
Euro Plunges to Two-Month Low as Traders Bet on Further Weakness Post-Fed Hike
- •The euro fell to its lowest in nearly two months against the dollar, weakening by 0.2% to $1.1426, as options traders increased bets on further depreciation.
- •Sentiment for the euro has turned increasingly bearish, with year-end positioning near levels last observed in mid-August, driven by expectations of further Federal Reserve tightening.
- •Persistently high energy prices are adding to the euro's headwinds by negatively impacting the euro area's growth outlook.
- •Data from DTCC shows a significant shift post-Fed decision, with approximately 60% of total notional options exposure now positioned for euro weakness.
- •Political uncertainty in France and Germany, along with higher US rates, are contributing to the pressure on the euro, making gains against the dollar more challenging.
Key Questions Answered
The euro dropped to its lowest level in nearly two months as options traders increased bets on further weakness following the Federal Reserve's latest interest-rate increase.
Persistently high energy prices are adding a headwind by weighing on the euro area's growth outlook, even as oil prices head toward a sixth consecutive daily decline.
Political pressure is mounting as France faces a difficult budget fight in a fragmented parliament, and Chancellor Friedrich Merz's Christian Democrats deal with fallout from a poor German state election result.
