The euro is under pressure, declining against the US dollar to its weakest level in over a month. Economic data from the Eurozone and the US, coupled with diverging central bank policies, are contributing to this downward trend. Germany’s fragile economic growth and Eurozone inflation returning to the ECB’s target are key factors, while stronger-than-expected US retail sales are bolstering the dollar.
- The euro traded at $1.163, its weakest level in over a month.
- Germany’s economy grew 0.2% in 2025, ending a two-year contraction, though weakness in manufacturing persists.
- Eurozone inflation slowed to 2.0% in December, returning to the ECB’s target.
- ECB member François Villeroy de Galhau dismissed expectations of a rate hike in 2026.
- Strong US retail sales data strengthened the US dollar.
- EUR/USD is edging back towards the 1.1600 area.
- Strong US macroeconomic figures and easing concerns about the US Federal Reserve’s autonomy are underpinning support for the Greenback.
- US President Trump calmed markets, assuring he has no plan to oust Chairman Jerome Powell.
The performance of the Euro is currently influenced by a combination of factors. Economic indicators in the Eurozone are mixed, with growth in Germany tempered by manufacturing concerns, and inflation hitting the target. Central bank policy outlooks differ, with the ECB signaling no immediate rate hikes while the US dollar receives support from positive economic data. This environment suggests continued volatility and potential downside risk for the Euro in the near term.