The euro advanced against a basket of major and minor currencies during European trading on Friday, extending its gains against the US dollar for a second consecutive session and moving closer to posting a weekly gain.

The single currency has been supported by renewed weakness in the US dollar following softer-than-expected US employment data, which reduced expectations that the Federal Reserve will raise interest rates later this year.

Investors are also closely watching remarks from European Central Bank President Christine Lagarde later today for fresh clues about inflation trends and the outlook for monetary policy in the eurozone.

The Price

• EUR/USD rose 0.1% to $1.1445 from an opening level of $1.1432, after touching an intraday low of $1.1421.

• The euro gained 0.5% against the dollar on Thursday, recording its first daily advance in three sessions and its strongest one-day gain since May, following the release of weaker-than-expected US employment figures.

Weekly Performance

As of Friday’s trading, the euro is up approximately 0.55% against the US dollar for the week and is on track to record its first weekly gain in the past three weeks.

US Dollar

The US Dollar Index fell 0.1% on Friday, extending losses for a second straight session and trading near a two-week low of 100.56 points, reflecting continued weakness in the greenback against a basket of major currencies.

June’s disappointing US employment report prompted markets to scale back expectations for additional Federal Reserve tightening, although investors continue to await further economic data for confirmation.

US job growth slowed sharply in June, with nonfarm payrolls increasing by just 57,000 jobs, well below market expectations for a gain of 110,000. Meanwhile, the labor force participation rate fell to 61.5%, its lowest level in more than five years.

Following the report, CME FedWatch pricing showed that the probability of the Federal Reserve leaving interest rates unchanged at its July meeting increased from 71% to 82%, while the probability of a 25-basis-point rate hike fell from 29% to 18%.

Market expectations for unchanged rates at the December meeting also rose from 15% to 22%, while the probability of a quarter-point hike declined from 85% to 78%.

European Interest Rates

• ECB President Christine Lagarde said on Wednesday in Sintra, Portugal, that risks surrounding inflation and economic growth in the eurozone had become more balanced than they were a few weeks ago, helped by the recent decline in oil prices.

• Official eurozone inflation data showed a larger-than-expected slowdown in consumer price growth during June, supported by lower fuel prices following the end of the Iran conflict.

• Following those comments and inflation figures, money markets reduced the probability of a 25-basis-point ECB rate hike in July from 30% to just 5%.

• Investors are now awaiting additional eurozone data on inflation, unemployment, and wage growth to reassess the outlook for monetary policy.

Christine Lagarde

At 08:00 GMT, ECB President Christine Lagarde is scheduled to deliver a speech at the Aix-en-Provence Economic Meetings in France.

Her remarks may provide further insight into inflation developments across the eurozone and the ECB’s outlook for interest rates during the remainder of the year.

The Japanese yen weakened against a basket of major and minor currencies during Asian trading on Friday, resuming its losses against the US dollar after a brief recovery in the previous session as traders engaged in profit-taking activity.

Despite the latest decline, the Japanese currency remains on track to post its first weekly gain in two months, supported by a rebound from its lowest levels in 40 years and renewed warnings from Japanese officials over excessive movements in the foreign exchange market.

The Price

• USD/JPY rose 0.25% to ¥161.52 from an opening level of ¥161.10, after touching an intraday low of ¥160.92.

• The yen gained 0.9% against the dollar on Thursday, marking its first daily advance in four sessions and its strongest one-day gain since May, as traders bought the currency after it fell to a 40-year low of ¥162.84.

• Supported by bargain buying, the yen climbed to a two-week high of ¥160.62. The move was also fueled by speculation about potential intervention by the Bank of Japan in the foreign exchange market and weaker-than-expected US employment data.

Weekly Performance

As of Friday’s trading, the yen is up around 0.25% against the US dollar for the week and is on track to record its first weekly gain since May.

Japanese Authorities

The yen’s slide to a 40-year low has revived speculation that Japanese authorities could return to the market after spending a record ¥11.7 trillion ($73.5 billion) in April and May to support the currency against excessive volatility.

Investors remain alert to the possibility of intervention after Japanese officials shifted away from their usual strategy of signaling intervention in advance, opting instead for a more targeted approach aimed at increasing pressure on speculators and raising the cost of betting against the yen.

Toshihiro Nagahama, a government adviser and member of an official policy panel, said on Thursday that the Bank of Japan should continue raising interest rates gradually to help curb excessive weakness in the yen.

Japanese Finance Minister Satsuki Katayama also reiterated on Friday that the government stands ready to respond appropriately to currency movements, renewing official warnings as traders monitor the possibility of intervention.

“Our position has not changed. We will respond appropriately whenever necessary,” Katayama told reporters, adding that Japan remains in close contact with US authorities regarding foreign exchange issues, including during US public holidays.

Views and Analysis

• Kristy Tan, Chief Global Investment Strategist at Franklin Templeton Institute, said intervention could slow the pace of the yen’s decline, curb excessive speculation, and signal policymakers’ concerns, but it would not fundamentally change market dynamics.

• Tan added that as long as investors can borrow cheaply in yen and invest in higher-yielding US assets, carry trades will continue to pressure the Japanese currency.

• Traders view Friday’s US market holiday as a potential opportunity for the Bank of Japan to intervene, as thinner liquidity conditions could amplify the impact of any currency-buying operation while reducing its cost.

Japanese Interest Rates

• Market pricing currently implies less than a 25% probability that the Bank of Japan will raise interest rates by a quarter percentage point at its July meeting.

• Investors are awaiting additional data on inflation, wages, and unemployment in Japan to reassess those expectations.

XRP continued to advance on Thursday, trading above the $1.07 level after successfully holding support at $1.03, despite the heavy selling pressure that has dominated the cryptocurrency market in recent weeks.

The improvement came as investor appetite for risk assets recovered following reports that recently concluded talks between the United States and Iran in Doha had achieved “positive progress.”

US labor market data and the Federal Reserve

Data released by the US Department of Labor showed that the US economy added 57,000 jobs last month, well below economists’ expectations for 110,000 new jobs, while the unemployment rate remained unchanged at 4.2%.

The figures followed a report released on Wednesday showing that US private-sector job growth in June also came in below market expectations.

Following the data release, traders scaled back expectations for further monetary tightening. Markets are now pricing in roughly a 51% probability of a Federal Reserve rate hike by September, down from 66% before the employment report, according to CME Group’s FedWatch Tool.

Federal Reserve Chair Kevin Warsh said on Wednesday that inflation expectations and related risks had eased in recent weeks, while reaffirming the central bank’s commitment to bringing inflation back to its 2% target.

On the geopolitical front, the United States and Iran concluded another round of indirect talks on Wednesday without clear signs of progress toward a permanent peace agreement. The ongoing uncertainty continued to support demand for safe-haven assets such as gold.

According to Qatari mediators, progress was achieved on issues related to the memorandum of understanding, and both sides agreed to continue discussions.

Persistent outflows and declining retail participation

Despite the recent rebound, institutional interest in XRP remains weak, as reflected by two consecutive days of fund outflows.

Data from SoSoValue showed that XRP exchange-traded funds recorded nearly $2 million in outflows on Wednesday, following approximately $3 million in withdrawals on Tuesday.

The continued capital outflows suggest that caution and risk aversion remain dominant among investors, potentially limiting XRP’s ability to extend its recovery in the near term.

At the same time, retail participation continues to decline. Open interest in XRP futures fell to $2.29 billion on Thursday, compared with $2.31 billion the previous day.

This trend highlights weakening investor confidence in XRP’s short- and medium-term outlook. It also suggests that bearish traders remain willing to pay a premium to maintain short positions, while bullish investors are showing limited interest in opening new long positions.

Oil prices were little changed on Thursday after Qatar announced “positive progress” in indirect negotiations between the United States and Iran, boosting hopes that regional tensions could ease further.

Brent crude futures for September delivery rose 23 cents to settle at $71.80 per barrel.

US West Texas Intermediate crude futures for August delivery gained 11 cents to close at $68.69 per barrel.

A spokesperson for Qatar’s Ministry of Foreign Affairs said on social media that mediators from Qatar and Pakistan had concluded separate meetings with US and Iranian negotiators in Doha on Wednesday, adding that “positive progress” had been achieved on issues related to the memorandum of understanding between the two sides.

US President Donald Trump also told reporters on Wednesday that negotiations with Iran were proceeding well.

“They had very good meetings, and we’ll see what happens,” Trump said.

Indirect talks between Washington and Tehran began in Doha on Tuesday, with US Special Envoy Steve Witkoff and Jared Kushner conducting discussions through Qatari mediators without holding direct meetings with Iranian officials.

Supply concerns ease as shipping activity recovers in the Strait of Hormuz

The renewed diplomatic efforts followed heightened tensions over the weekend that threatened a 60-day ceasefire agreement between the two countries after Iran attacked two commercial vessels, prompting retaliatory US strikes on targets inside Iran.

Investors are increasingly factoring in the possibility of lower geopolitical risk if negotiations continue to make progress, which could reduce concerns over disruptions to Middle Eastern oil supplies.

ING said markets remain optimistic that oil flows from the Gulf region will continue returning to normal despite the recent military escalation, helping explain why Brent crude recorded its worst quarterly performance since early 2020.

The bank added that shipping activity through the Strait of Hormuz has started to recover gradually.

According to ING, around 11 oil tankers passed through the strait on Tuesday, compared with a peak of 24 vessels recorded last week.

The firm also noted that inbound traffic into the Gulf has begun rising again, signaling growing confidence among shipowners in returning their tankers to Gulf trade routes.