EUR/USD comes under pressure as Fed's Williams warns of more interest rate hikes

EUR/USD bias: near-term bearish for the euro, but not one-sided. Williams’s comment that another Fed hike by year-end is “reasonable” can lift expected US rates and Treasury yields, supporting the dollar through a wider expected rate advantage over the euro. The pressure could extend to other dollar pairs if markets treat the remarks as a signal of broader Fed resolve—not just one official’s view.

The counterweight is stronger-than-expected German IFO data, which offers some support to the euro by improving the growth outlook. That may limit the pair’s downside if US rate expectations fail to rise further or incoming US inflation and employment data do not validate a hike. The article also notes oversold conditions, which could leave EUR/USD vulnerable to a short-term rebound even if the broader rate-driven bias remains negative.

What to watch:

whether other Fed officials reinforce Williams’s stance, how US yields and rate expectations respond, and whether euro-area data continue to surprise positively. The impact is most durable if hawkish Fed pricing persists; without that confirmation, the initial dollar support may fade.