USD Weakens vs EUR on Softer US Data, Trimming Fed Hike Bets
- The dollar edged lower against the euro on Monday as softer US payrolls and retail sales data prompted traders to reduce expectations for near-term Federal Reserve rate hikes.
Recent US economic releases, including weaker-than-expected payrolls and retail sales figures, have shifted market sentiment toward a more dovish Fed outlook. This has directly pressured the USD, allowing EUR/USD to climb to a two-month high near 1.1578.
The euro's gains reflect reduced odds of aggressive US tightening amid cooling domestic indicators. Central bank policy divergence is now a key driver, with the ECB potentially maintaining a steadier stance compared to revised Fed expectations.
Equity and bond markets are also reacting, with implications for carry trades and risk sentiment. Traders should monitor upcoming US inflation prints and Fed speakers for confirmation of the repricing.
This move affects G10 crosses broadly, boosting EUR-based assets while pressuring USD-denominated emerging market debt. Watch for technical resistance around 1.16 and any geopolitical oil spikes that could revive USD safe-haven flows.
AI insight — what it means
Softer US jobs and sales numbers led traders to expect fewer interest rate increases from the Federal Reserve soon. This makes the dollar less appealing, so it loses ground against the euro.
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