The euro traded above $1.15 in early August, rebounding from a recent seven-week low of $1.139, amid diverging monetary policy outlooks between the Federal Reserve and the European Central Bank (ECB).
A weaker-than-expected US July payrolls report—coupled with sharp downward revisions to May and June figures—intensified market expectations of a Fed rate cut as early as September, with at least one more cut anticipated by year-end.
In contrast, the ECB is expected to keep rates steady in the coming months as it adopts a cautious stance, monitoring the economic impact of new US tariffs and steady inflation.
Recent data showed Eurozone annual inflation held at 2.0% in July, slightly above forecasts of 1.9%, marking the second consecutive month at the ECB’s target.