The euro fell in European trading on Friday against a basket of global currencies, extending its losses for a third consecutive session against the US dollar and hitting its lowest level in three months. The decline comes amid broad selling pressure across major currencies and growing investor demand for the US dollar as the most attractive available investment, particularly following the hawkish Federal Reserve meeting, which significantly strengthened expectations for a US interest rate hike in December.

After the European Central Bank reiterated at its latest meeting that it is not committed to a predetermined path for monetary policy or interest rates, investors are awaiting additional key economic data from the euro area to reassess expectations for European interest rates.

The Price

Euro exchange rate today: The euro fell 0.3% against the dollar to $1.1423, its lowest level since March 16, from today's opening level of $1.1458. The session high was recorded at $1.1466.

The euro ended Thursday down about 0.4% against the dollar, marking its second consecutive daily loss, following the outcome of the Federal Reserve's first monetary policy meeting under Kevin Warsh.

US dollar

The US Dollar Index rose 0.3% on Friday, extending gains for a third consecutive session and reaching a 13-month high of 101.10 points, reflecting continued broad-based strength in the US currency against a basket of major and minor currencies.

The advance comes as investors continue to favor the dollar as the most attractive available investment, especially after the Federal Reserve's latest meeting, which was more hawkish than markets had anticipated.

At its first monetary policy meeting under Kevin Warsh, the Federal Reserve raised its inflation and policy rate forecasts for the current year, signaling that inflationary pressures remain persistent. The Summary of Economic Projections also showed that 9 of the 18 policymakers expect at least one interest rate increase before the end of 2026.

Following the meeting, according to CME Group's FedWatch Tool, market pricing for the Federal Reserve to leave interest rates unchanged at its July meeting fell from 91% to 72%, while the probability of a 25-basis-point rate hike increased from 9% to 28%.

Market pricing for the Federal Reserve to keep rates unchanged at its December meeting also declined from 45% to 15%, while expectations for a 25-basis-point rate increase rose from 55% to 85%.

European interest rates

Reports: The European Central Bank is considering pausing monetary policy normalization in July if energy prices remain at current levels.

Amid declining oil prices, money markets reduced the probability of a 25-basis-point ECB rate hike in July from 50% to 30%.

Money market pricing for a 25-basis-point ECB rate increase in September also declined from 70% to 50%.

Investors are awaiting further economic data from the euro area, particularly inflation, unemployment, and wage figures, to reassess the above expectations.