In the last few weeks, many currency traders had begun to shift their attention in favor of the Euro, based on the expectation that the US-EU interest rate differential would soon narrow. That all changed yesterday, as economic data underscored support for monetary tightening. Specifically, the data showed a record month for new home sales, suggesting the housing market and even the US economy are still buoyant. As a result, currency traders and economists are predicting that the Fed will now hike rates three more times, which represents a change from the previous consensus of two times. If the Fed fulfills these expectations, you can expect the USD to continue outpacing the Euro in the near-term. The Financial Times reports:

“The US will be tightening more than the market thinks, and while the ECB will hike this week, we don’t think there will be a follow-up hike until June.”

Read More: Rise in US home sales lifts dollar