Euro Struggles as Dollar Strengthens Amid Diverging Rate Cuts

The euro fell against the dollar as global markets processed central bank meetings indicating diverging rate cuts by 2025. The dollar index rose, buoyed by the Federal Reserve's cautious rate projections and the easing of U.S. inflation. European and Japanese currencies faced pressure from these developments.

In financial markets, the euro continued its decline against the dollar on Monday, influenced by recent central bank meetings and expectations for differing rate cuts by 2025. The dollar index surged to a two-year high, reflecting fresh optimism from the Federal Reserve's conservative rate cut predictions.

The Federal Reserve's announcement of a gradual rate cut plan sent shockwaves, boosting Treasury yields and lifting the dollar, while casting uncertainty over emergent markets. U.S. inflation showed only slight increases, alleviating some rate cut concerns, although core inflation remains above the 2% target.

The hesitant prospects around rate cuts tempered the euro's advances, continuing its months-long downturn against the burgeoning dollar. European Central Bank President Christine Lagarde suggested potential rate cuts, citing the euro zone's nearness to achieving inflation goals, sparking varied reactions from market analysts.

(With inputs from agencies.)