The euro rose in the European market on Wednesday against a basket of global currencies, maintaining gains for the second consecutive day against the US dollar, and is on the verge of recording its highest level in at least two weeks, as the US currency remains under negative pressure following the release of key US inflation data.

Expectations for a European interest rate cut in September have declined due to the currently entrenched inflationary pressures on European Central Bank policymakers. To reprice these expectations, investors are awaiting further economic data from the euro area.

Price Overview

•Today’s euro exchange rate: The euro rose against the US dollar by more than 0.1% to $1.1688, from today’s opening price of $1.1674, recording its lowest level at $1.1669.

•The euro ended Tuesday’s session up 0.5% against the dollar, its first gain in the last three days, supported by the rise in expectations of a US interest rate cut in September.

US Dollar

The US Dollar Index fell by about 0.1% on Wednesday, extending losses for the second consecutive session, and is about to surpass a two-week low of 97.90 points, reflecting continued weakness in the US currency against a basket of global currencies.

Data released Tuesday in the US showed a moderate rise in consumer prices in July, which led to an increase in expectations for the Federal Reserve to cut interest rates next month.

Karl Schamotta, chief market strategist at Corpay, said: “Core inflation remains subdued, allowing policymakers room to maneuver in response to signs of impending weakness in the labor market.”

Following this data and according to CME Group’s FedWatch tool: Market pricing for a 25 basis point US interest rate cut in the September meeting rose from 88% to 94%, while pricing for keeping rates unchanged fell from 12% to 6%.

To reprice these expectations, investors are awaiting key US data on Thursday and Friday, including producer prices, jobless claims, and monthly retail sales.

European Interest Rates

•Recent inflation data in the euro area showed that entrenched inflationary pressures persist for European Central Bank policymakers.

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

•Money market pricing for a 25 basis point ECB rate cut in September is currently steady below 30%.

•To reprice these expectations, investors in the coming period are awaiting numerous economic data releases in Europe, in addition to monitoring comments from ECB officials.

The Japanese yen declined in the Asian market on Wednesday against a basket of major and minor currencies, resuming losses that had temporarily paused yesterday against the US dollar, and is on the verge of touching its lowest level in two weeks, amid negative pressure, particularly from the currently weak prospects for the Bank of Japan to raise Japanese interest rates in September.

The US dollar rebounded as markets digested key US inflation data, awaiting further solid evidence regarding the likelihood of Federal Reserve rate cuts in September and October.

Price Overview

•Today’s yen exchange rate: The US dollar rose against the yen by 0.2% to ¥148.17, from today’s opening price of ¥147.84, recording its lowest level at ¥147.70.

•The yen ended yesterday’s session up 0.2% against the dollar, its first gain in the last three days, after earlier hitting a two-week low at ¥148.52.

•Aside from buying at lower levels, the yen rose after the release of US headline inflation data for July that came in below expectations.

Japanese Interest Rates

•Minutes from the Bank of Japan’s June monetary policy meeting showed that some board members said the central bank would consider resuming interest rate hikes if trade tensions eased.

•Recently released inflation and wage data showed declining inflationary pressures on Japanese central bank policymakers.

•Market pricing for a quarter-point interest rate hike at the September meeting remains below 40%.

•To reprice these expectations, investors are awaiting further data on inflation, unemployment, and wages in Japan.

US Dollar

The US Dollar Index rose by about 0.1% on Wednesday, in an attempt to recover from a two-week low of 97.90 points, reflecting a rebound in the greenback against a basket of global currencies.

Aside from buying at lower levels, the dollar’s rebound came as trade tension concerns between the US and China eased, in addition to digesting Tuesday’s US inflation data.

Carol Kong, currency strategist at Commonwealth Bank of Australia, said: “The July CPI report showed less evidence of tariffs impacting prices… (but) I think a rate cut in September is not entirely certain, and perhaps not as certain as current market pricing suggests.”

According to CME Group’s FedWatch tool: Market pricing for a 25 basis point rate cut at the September meeting is currently steady at 94%, with a 6% probability of no change in rates.

To reprice these expectations, investors are awaiting key US data on Thursday and Friday, including producer prices, jobless claims, and monthly retail sales.

Ethereum’s price surged sharply on Tuesday, reaching its highest level in several years as the cryptocurrency attracted increased investment and inflows.

Exchange-traded funds (ETFs) focused on Ethereum saw unprecedented inflows on Monday, reflecting growing institutional interest and pushing the cryptocurrency closer to a new record high.

According to Farside Investors data, investors poured over $1 billion in cash into Ethereum ETFs on Monday, surpassing the previous single-day record of $726.6 million set in July.

The nine US-listed funds now collectively hold assets exceeding $10 billion. Of the approximately $1.019 billion in inflows on Monday, BlackRock’s iShares Ethereum Trust ETF captured the largest share, about $640 million.

Ethereum touched $4,000 on Friday for the first time since last December, then climbed Tuesday afternoon to over $4,500 — its highest since late 2021. According to CoinGecko, the cryptocurrency is up about 26% in seven days and more than 50% over the past 30 days, now only 8% away from its all-time high of $4,878 set in 2021.

Users on the Myriad platform widely expect Ethereum to set a new record this year, giving it an 89% probability of doing so at the time of writing. (Note: Myriad Markets is a product of DASTAN, which owns Decrypt.)

The rally itself may be drawing investors to Ethereum ETFs, which in turn could fuel further gains.

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, told Decrypt: “There was a moment where people saw the price going up and thought it was good.” He added, “Price reflects sentiment; if it goes up, people start inventing narratives.”

Balchunas noted that inflows into Ethereum funds have been “strong,” at a time when the cryptocurrency is becoming easier to understand thanks to growing interest in stablecoins. Last month, President Donald Trump signed the GENIUS Act, which establishes a regulatory framework for issuing these coins in the US.

“The narrative has become clearer with stablecoins,” Balchunas explained, noting that most ordinary people can grasp the idea of stablecoins and may like the concept of a digital dollar.

He credited Tom Lee of Fundstrat Global Advisors for shaping this narrative, highlighting Lee’s view that stablecoins are the best use case for Ethereum’s network — a perspective that has helped investors understand what sets the second-largest cryptocurrency by market value apart from Bitcoin and other major digital assets.

Lee has spoken frequently about Ethereum on CNBC, saying in June that the cryptocurrency was “coming back strong” and could be “the next Bitcoin,” with stablecoins as the “killer app” for its network. Although Lee is known for his long-term Bitcoin optimism, he now backs the treasury strategy of Nasdaq-listed BitMine Immersion, which is buying Ethereum heavily and currently holds $5 billion worth of it.

Other publicly listed companies and institutional investors have also begun buying the cryptocurrency. Ethereum entered traditional markets last year when the US Securities and Exchange Commission quietly approved ETFs that give investors exposure to its price.

Although these funds initially drew less interest compared to the historic launch of Bitcoin ETFs earlier in the year, they have seen increased adoption in recent months as Ethereum returns to the spotlight in the crypto market.

Ethereum’s network is used by developers to build crypto products, sometimes called decentralized applications or “dapps.” Stablecoins — now being developed by major banks and publicly traded companies — are described as faster, cheaper payment methods.

These digital tokens include USDC and Tether’s USDT, which often operate on Ethereum’s network.

Ethereum

In trading, Ethereum’s price jumped 8.6% to $4,587.5 at 21:25 GMT on CoinMarketCap.

The Australian dollar rose against most major currencies on Tuesday following a widely expected monetary policy decision.

The Reserve Bank of Australia on Tuesday cut the official cash rate by 25 basis points to 3.60% at its regular meeting, marking the third rate cut this year after reductions in February and May, and following a surprise pause in July that puzzled analysts and frustrated mortgage holders.

The decision was in line with broad market expectations, with futures pricing pointing to nearly a 100% probability of a cut, and all four major banks forecasting at least one more reduction before year-end. A Reuters poll conducted last week showed all 40 surveyed economists expecting a cut this week.

At the press conference following the meeting, Governor Michele Bullock said:

“The outlook suggests the cash rate may need to be a little lower than it is now to keep inflation falling and stable while supporting employment growth, but there remains a good deal of uncertainty. Therefore, the Board will continue to focus on the data to guide its decisions.”

Bullock confirmed the Bank did not discuss a cut larger than 25 basis points. Commonwealth Bank was the first to pass on the reduction to mortgage rates, followed by other banks.

Inflation Falls, Economy Slows

The RBA expressed satisfaction with the sharp decline in inflation, with the “trimmed mean” – its preferred core inflation measure – falling below 3% for the second consecutive quarter, a marked change from 2023 when inflation was well above target.

Headline inflation eased to 2.1%, comfortably within the 2%–3% target range, while the trimmed mean stood at 2.7%. The Bank noted:

“Inflation has declined substantially from its 2022 peak, with higher interest rates helping bring aggregate demand and potential output closer to balance.”

In contrast, data point to a clear slowdown in the economy; GDP grew just 0.2% in Q1 and 1.3% year-on-year, well below the Bank’s earlier forecasts. Unemployment rose to 4.3%, job ads fell, and household spending remained weak with flat retail sales and continued pessimism in consumer sentiment.

In its quarterly monetary policy statement, the Bank lowered its GDP growth forecast for December 2025 to 1.7% from 2.1%, citing weak consumer spending and lower business investment, indicating the need for more cuts to support growth.

Consensus on Early Action

Minutes from the July meeting showed a split decision at the time, with three members supporting a cut and six preferring to wait for more inflation data. Today, however, all nine members voted in favor of the cut, signaling the Bank is now more convinced of the need to act early to provide extra support rather than risk a deeper slowdown later.

More Cuts Expected

The Bank’s statement kept the door open for additional easing, noting the potential for further cuts if inflation remains under control and economic activity weakens.

Markets are betting on another 25-basis-point cut in November, with expectations that the cash rate will fall to around 3.35% by year-end. Major banks foresee continued easing, with NAB projecting 3.10% by February 2026 and Westpac seeing 2.85% by mid-2026, in agreement that today’s move will not be the last in this cycle.

In currency markets, the Australian dollar rose against the US dollar by 0.3% to 0.6531 as of 20:57 GMT.

Canadian Dollar

The Canadian dollar was steady against its US counterpart at 0.7258 as of 20:57 GMT.

US Dollar

The US dollar index fell 0.4% to 98.09 as of 20:24 GMT, after hitting a high of 98.6 and a low of 97.9.

Government data showed that the annual growth rate of the US consumer price index held steady at 2.7% in July, below expectations for a rise to 2.8%.

Core CPI – which excludes volatile food and energy prices – rose to 3.1% in July, above expectations for 3% and compared with 2.9% in June.

According to the FedWatch tool, investors see a 94% probability of a 25-basis-point rate cut in September, compared with 86% yesterday and 57% a month ago.

Analysts also see a 61% chance of another 25-basis-point cut in October, compared with 34% a month ago, plus a 51% probability of a similar cut in December, compared with 25% a month earlier.