The euro strengthened, surpassing $1.17, reaching its highest level since late July. This increase was fueled by broad dollar weakness following US jobs data indicating a cooling labor market and increasing anticipation for a Federal Reserve rate cut later this month. Market expectations now include approximately 66 basis points of easing in 2025. Attention is now directed toward the upcoming European Central Bank (ECB) meeting, where policymakers are expected to maintain current interest rates.
- The euro climbed above $1.17, its strongest level since late July.
- Dollar weakness followed US jobs data indicating a cooling labor market.
- The US economy added just 22K jobs in August, well below the 75K forecast.
- The unemployment rate rose to 4.3%, the highest since 2021.
- Markets are pricing around 66bps of easing in 2025.
- Focus now shifts to next week’s ECB meeting, where policymakers are widely expected to leave rates unchanged.
- The eurozone economy expanded 0.1% in Q2, while inflation came in at 2.1% in August.
- Fiscal risks are back in focus in Europe amid the prospect of higher defense spending and increased German infrastructure investment.
- Political attention is also turning to French Prime Minister François Bayrou’s September 8 confidence vote.
The asset’s recent performance is directly influenced by external factors, particularly the state of the US economy and related monetary policy expectations. While the eurozone economy shows signs of stability and inflation remains near target, fiscal concerns and political uncertainties within Europe could introduce volatility. The ECB’s anticipated decision to hold rates steady provides a backdrop of consistency, but future movements will likely hinge on the interplay between these domestic and international economic forces.