FX.co ★ Euro Extends Losses as Hawkish Fed Signals Boost Dollar

The euro extended its slide below $1.14, hitting a new near two‑month low as the dollar strengthened on the back of stronger‑than‑expected US PMI data and a series of hawkish comments from Federal Reserve officials, which reinforced expectations of further monetary tightening. A rebound in oil prices, amid ongoing uncertainty over US‑Iran negotiations, also pressured risk‑sensitive assets.

At the same time, investors assessed better‑than‑forecast PMI figures showing that eurozone private-sector activity grew in September at its fastest pace in almost three and a half years, bolstering expectations that the ECB may deliver additional interest rate hikes this year. ECB official Joachim Nagel said Tuesday that oil prices are becoming an increasingly important factor in monetary‑policy decisions and kept the option of further rate increases on the table. Meanwhile, Chief Economist Philip Lane cautioned that another spike in energy prices could keep eurozone inflation elevated for longer than currently anticipated.