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Euro stays above 1.1500 as US inflation cools Fed rate expectations

US PPI slowed to 4.7% in headline terms and 4.2% in core, while traders trimmed odds of a Fed hike by year end and awaited EU GDP data.

Reported · Written up by our desk · Major Pairs

The euro held above 1.1500 against the US dollar as softer US inflation data reduced expectations of additional Fed tightening, according to FXStreet. Spot EUR/USD stayed in a sideways range, with the pair trading around 1.1529 as investors looked ahead to upcoming catalysts in both regions.

FXStreet reported that US producer-side inflation cooled after the prior CPI print, with the Producer Price Index rising 4.7% in headline terms and 4.2% in core figures versus June. Traders scaled back expectations for a September move to easing, shifting from an anticipated rate hike to the view that the Fed may hold at its September 16 meeting.

The outlet also noted that odds for a Fed hike by the end of the year slipped, with Prime Terminal pricing a 67% chance of a hike versus about 70% the prior day. Jobless claims edged up to 209K from 200K above estimates, while geopolitical headlines were limited as Iran reiterated that the Strait of Hormuz remains closed.

Meanwhile in Europe, Spain inflation rose to 3.9%, its highest level since May 2025, driven by higher energy prices, FXStreet said. Money markets were pricing roughly an 87% probability that the ECB will raise rates by 25 basis points at its September meeting, while investors awaited euro area GDP expected at 0.4% QoQ and 1% YoY.

Latest closeEUR/USD 1.153 ▼0.1%

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