The euro has stabilized at $1.16, finding some support as bond markets calmed. Investors are cautiously optimistic due to expectations of a potentially more dovish stance from the Federal Reserve, influenced by recent weak US labor market data. In Europe, however, fiscal concerns are resurfacing, potentially impacting the currency.
- The euro stabilized at $1.16.
- Investors are awaiting the US nonfarm payrolls report on Friday.
- Weak US labor market data has raised expectations of a more dovish Federal Reserve.
- The ADP survey showed private businesses added only 54,000 jobs in August, significantly below expectations.
- Job openings fell in July to their lowest since September 2024.
- Jobless claims exceeded expectations.
- Fiscal risks are increasing in Europe due to potential increases in defense spending and German infrastructure investment.
- French Prime Minister François Bayrou faces a confidence vote on September 8.
The asset’s stability is currently tied to external factors, specifically the anticipated actions of a major central bank. While a weaker dollar could provide support, internal pressures within Europe, particularly concerning government spending and political uncertainty, could limit gains or even trigger a decline. The upcoming political event adds another layer of complexity and potential volatility for the currency.