Euro stalls after huge daily profit

The euro declined in European trading on Monday against a basket of global currencies, as part of a corrective pullback after Friday’s sharp rally. The single currency gave up a two-week high versus the US dollar due to profit-taking and technical selling.

European inflation figures for July came in hotter than expected, reinforcing inflationary pressures on European Central Bank policymakers and reducing the likelihood of a rate cut in September.

Price Overview

•EUR/USD fell by 0.35% to $1.1550, down from the opening price of $1.1589. The pair recorded a session high of $1.1597 — the highest level since July 28.

•On Friday, the euro surged 1.5% against the dollar, marking its second straight daily gain and its strongest one-day performance since April 10, as it continued to recover from a two-month low of $1.1400.

•In addition to bargain buying at lower levels, Friday’s gains were driven by better-than-expected eurozone inflation data and downbeat US labor market figures.

US Dollar

The US Dollar Index rose by 0.3% on Monday, attempting to recover from Friday’s steep losses, reflecting renewed demand for the greenback against a basket of major currencies.

This rebound comes as markets await further confirmation regarding the likelihood of a Federal Reserve rate cut in September, particularly in light of ongoing remarks from Fed officials.

European Interest Rates

•Eurozone consumer prices rose by 2.0% in July, beating market expectations of a 1.9% increase and matching the previous month’s 2.0% reading.

•The data indicates persistent inflationary pressure on ECB policymakers.

•According to Reuters sources, a clear majority of ECB members favored keeping interest rates unchanged at the upcoming September meeting — for a second consecutive time.

•Market pricing for a 25-basis-point ECB rate cut in September remains below 30%.

•Investors will closely monitor upcoming eurozone data and ECB commentary to reassess those odds.