The main currency pair rose to 1.1080 USD in the wake of the long-awaited recovery. The weak dollar triggers the rally of rival currencies.

• The EURUSD Couple moved confidently higher as changes in the foreign exchange markets put pressure on the greenback and pushed alternative currencies higher. The euro hit a new yearly high, hitting $1.1080 early Tuesday. Sterling also started the week strongly, with the British currency capping its third consecutive day of gains against a weakening American currency. What’s behind the dollar’s decline?
• A narrative change has undermined the greenback’s valuation. The dollar is languishing near its 2024 low as traders have broadly priced in the first rate cut since March 2020. More specifically, the market is now positioning itself for a cut in borrowing costs when the Federal Reserve meets for its September meeting. The question now is not if, but by how much, rates will fall.
• Most analysts predict a 25 basis point drop, while others are calling for a massive 50 basis point drop from the current 23-year high of 5.50%. Lower interest rates are meant to make money more affordable by reducing borrowing costs, but they can also hurt the local currency, in this case the US dollar, by reducing the return on deposits. The euro-dollar pair is in for a volatile few days as the Jackson Hole symposium fast approaches.