Euro hovers near a week low before major sectors data

The euro declined in European trading on Thursday against a basket of global currencies, resuming losses after a temporary pause yesterday versus the US dollar, and approaching its lowest level in a week. This comes as renewed demand for the dollar continues, with investors viewing it as the best available investment.

Expectations for a European interest rate cut in September weakened due to persistent inflationary pressures facing European Central Bank policymakers. To reassess those expectations, investors await the release of key sector data in Europe for August later today.

Price Overview

• EUR/USD fell 0.1% to $1.1641 from the opening price of $1.1651, with a session high at $1.1655.

• The euro ended Wednesday’s session with less than a 0.1% gain against the dollar, its first in three days, after touching a one-week low of $1.1622 earlier in the day.

US Dollar

The US Dollar Index rose 0.1% on Thursday, resuming gains after a pause yesterday, moving close to a two-week high of 98.44 points, reflecting broad dollar strength against both major and minor currencies.

Federal Reserve Governor Lisa Cook reaffirmed her intention to remain in office despite President Donald Trump’s calls for her resignation over alleged mortgage fraud.

Minutes from the Fed’s latest policy meeting showed divisions over tariffs, inflation, and the labor market outlook.

Traders currently see around an 80% chance of a 25-basis point Fed rate cut in September, with expectations of a total 52 basis points of easing through the rest of the year.

European Interest Rates

• Recent eurozone inflation data showed persistent upward pressure on ECB policymakers.

• According to Reuters, a clear majority in the ECB’s latest meeting favored keeping interest rates unchanged in September, marking a second consecutive meeting without changes.

• Money market pricing shows the probability of a 25-basis point rate cut in September remains below 30%.

• To reassess these odds, investors are awaiting the release of key European sector data for August later today.

Euro Outlook

At Economies.com, we expect that if upcoming European sector data comes in stronger than currently anticipated, the likelihood of a September ECB rate cut will diminish, thereby supporting a rise in the euro’s exchange rate in global currency markets.