EUR/USD eases after hitting multi-year high, US data lifts Dollar

The Euro (EUR) edges modestly lower against the US Dollar (USD) during the American session on Tuesday, after briefly rising above the 1.180 mark earlier in the day, its highest level since September 2021. The Euro found support from signs that inflation in the Eurozone is stabilizing, boosting investor confidence in the region's economic outlook.

At the time of writing, EUR/USD is hovering near 1.1773, slightly below the intraday high of 1.1830, as the US Dollar trims earlier losses following upbeat US economic data. The ISM Manufacturing Purchasing Managers Index (PMI) and JOLTS Job Openings both surprised to the upside, helping the Greenback regain some footing.

The ISM Manufacturing PMI ticked up to 49 in June from 48.5 in May, slightly above the 48.8 forecast. Although still below the 50 mark, the reading points to a slower pace of decline in factory activity. Separately, the US labor market showed renewed strength as JOLTS Job Openings jumped by 374,000 to 7.769 million in May, the highest since November 2024 and well above the expected 7.3 million.

Following the data release, the US Dollar Index bounced off its intraday low of 96.38 and is now trading around 96.82 as the Greenback regained some momentum.

Earlier on Tuesday, fresh data from the Eurozone painted a slightly more optimistic picture. The HCOB Eurozone Manufacturing PMI edged up to 49.5 in June from 49.4 in May, reaching its highest level in nearly three years. On the inflation front, headline Consumer Price Index (CPI) increased to 2.0% YoY in June, up from 1.9% in May and in line with expectations, in line with the European Central Bank’s (ECB) target. Core inflation remained unchanged at 2.3%, the lowest level since January 2022.

At the ECB’s annual forum in Sintra, Portgual, President Christine Lagarde acknowledged that inflation is now at target but warned that risks remain “two-sided.. She pointed to growing global uncertainty, rising geopolitical tensions, and changes in how companies set prices as reasons why inflation has become harder to predict. Lagarde said the ECB will now focus more on various possible scenarios when making policy decisions, rather than relying solely on central forecasts.

The ECB also confirmed its commitment to the 2% inflation goal in the medium term but added that it needs to be more flexible in dealing with a more unpredictable global environment.

Looking ahead, investors will monitor comments from Federal Reserve (Fed) Chair Jerome Powell during the Sintra forum. Focus now shifts to Thursday's Nonfarm Payrolls (NFP) report, which could influence the Fed’s next policy move.