Euro approaches two-week high as dollar weakens

The euro rose in the European market on Monday against a basket of global currencies, resuming gains that had temporarily paused on Friday against the US dollar, approaching again its highest level in two weeks, supported by the weak performance of the US currency in the foreign exchange market.

Expectations for a European interest rate cut in September have declined due to entrenched inflationary pressures currently facing European Central Bank policymakers, and to reprice these expectations, investors are awaiting the release of more economic data in the euro area.

Price Overview

• EUR/USD today: The euro rose against the dollar by 0.3% to (1.1675$) from the opening price of (1.1640$), recording the day’s low at (1.1640$).

• The euro ended Friday’s session down 0.2% against the dollar, its first loss in four days, due to correction and profit-taking from the two-week high of 1.1699$.

• Last week, the euro rose by about 0.5% against the dollar, marking its second weekly gain in the past three weeks, driven by a series of bleak US economic data, especially from the labor market.

US Dollar

The US Dollar Index fell by more than 0.2% on Monday, nearing a two-week low at 97.95 points, reflecting the decline in US currency levels against a basket of major and minor currencies.

Attention remained focused on trade talks as the August 12 deadline set by Trump for reaching an agreement between the US and China approached.

According to CME’s FedWatch Tool: market pricing for a 25 basis point US interest rate cut at the September meeting is currently stable at 88%, while pricing for keeping rates unchanged stands at 12%.

To reprice these expectations, investors this week are awaiting the release of key US inflation data for July, which will show the extent to which higher tariffs have impacted prices and how much inflationary pressure Federal Reserve policymakers are facing.

European Interest Rates

• The latest eurozone inflation data showed persistent inflationary pressures on European Central Bank policymakers.

• According to some Reuters sources, a clear majority in the ECB’s latest meeting favored keeping interest rates unchanged in September, for the second consecutive meeting.

• Money market pricing for the ECB cutting European interest rates by 25 basis points in September is currently stable below 30%.

• To reprice these expectations, investors in the coming period will monitor the release of numerous economic data in Europe, as well as comments from European Central Bank officials.