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Euro rises as US Dollar weakens on tempered Fed hike outlook

EUR/USD was around 1.1580, near its highest level since June 17, as softer US data pushed Fed hike odds lower for September.

Reported · Written up by our desk · Major Pairs

The euro strengthened against the US dollar on Friday, with EUR/USD reversing earlier losses amid broad-based weakness in the greenback, according to FXStreet. The pair was trading around 1.1580, close to its highest level since June 17.

US Dollar moves followed data that cooled near-term Federal Reserve expectations. FXStreet cited a 0.6% decline in July US retail sales, a drop in the University of Michigan consumer sentiment index to 51.0 in August, and easing price pressure signals from recent CPI and PPI reports.

According to the CME FedWatch Tool cited by FXStreet, markets now assign about a 70% chance the Fed keeps rates unchanged in September, down from earlier expectations of a hike. The outlet also noted that one-year inflation expectations in the Michigan survey edged up to 4.3% from 4.2%, while the five-year measure held at 3.3%.

On the euro side, FXStreet said markets broadly expect the European Central Bank to raise rates in September, which would be its second hike this year. The ECB is tasked with maintaining price stability, with interest rate changes typically influencing the strength of the euro.

Latest closeEUR/USD 1.157 ▲0.4%

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