EUR/USD Weakens Despite Increasingly Dovish Fed Outlook
The EUR/USD currency pair fell near 1.1550 in early trading on Monday, despite market reactions to the prospect of an interest rate cut by the Federal Reserve. This decline occurred after the euro had strengthened by around 1.5% in the previous session. The strengthening of the US dollar was the main driver of the euro's weakness, following the currency's recovery from losses suffered following the release of disappointing US employment data.
US Nonfarm Payrolls (NFP) data in July showed an increase of only 73,000 jobs, well below the 110,000 expected. The previous month's figure was also revised down significantly. The rate of decline rose to 4.2%, supporting expectations that the Fed will cut interest rates soon. Markets are pricing in two rate cuts by the end of the year, with the first likely in September.
Although EUR/USD fell, its weakness is expected to be limited. The euro remains supported by expectations that the European Central Bank (ECB) will delay interest rate cuts as inflation in the eurozone remains high. Eurozone consumer inflation was recorded at 2.0% in July, slightly above the 1.9% projection. However, trade tensions remain a risk, particularly after the US imposed new 15% tariffs on European Union exports, which could weigh on the region's economic prospects. (ayu)
Source: Newsmaker.id
