EUR/USD rises to near 1.1600 as US data boost Fed rate cut bets

EUR/USD gains as the US Dollar struggles after softer data reinforcing Fed rate cut likelihood for December.
CME FedWatch Tool indicates pricing in more than 84% odds of a 25-basis-point Fed rate cut in December.
The Euro finds support amid cautious sentiment over the European Central Bank’s policy outlook.

Akhtar Faruqui FXStreet

EUR/USD extends its winning streak for the third successive session, trading around 1.1580 during the Asian hours on Wednesday. The pair is gaining as the US Dollar (USD) comes under pressure, with softer United States (US) economic data boosting expectations of a Federal Reserve (Fed) rate cut in December.

The CME FedWatch Tool suggests that markets are now pricing in more than 84% odds that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, up from 50% probability that markets priced a week ago.

The US Census Bureau released US Retail Sales on Tuesday, which rose by 0.2% month-over-month (MoM) in September, slowing from the 0.6% increase seen in August, indicating more cautious consumer spending. Retail Sales Control Group declined 0.1%, against the expectations of a 0.3% rise and the previous 0.6% growth. Separately, the Conference Board reported a sharp deterioration in household sentiment, with Consumer Confidence sliding 6.8 points to 88.7 in November from 95.5 in October.

The US Producer Price Index (PPI) remained steady at 2.7% year-over-year in September, matching expectations and August’s reading and suggesting that inflationary pressures have stabilized. Core PPI eased to 2.6% from 2.9%, undershooting forecasts of 2.7%.

Additionally, the EUR/USD pair gains ground as the Euro (EUR) draws support from cautious sentiment surrounding the European Central Bank (ECB) policy outlook. Traders expect the central bank to keep interest rates unchanged throughout 2026, citing a resilient economy and inflation near target.

ECB Governor and Deutsche Bundesbank President Joachim Nagel said on Monday that the central bank is also monitoring the strong rise in service prices, noting that December projections will offer clearer insight into whether the current monetary policy stance remains appropriate.

Euro FAQs

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

What is the ECB and how does it impact the Euro?

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

How does inflation data impact the value of the Euro?

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

How does economic data influence the value of the Euro?

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

How does the Trade Balance impact the Euro?

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

GBP/USD remains offered; bears target 1.3600

GBP/USD now leaves behind part of its recent recovery and revisits the low 1.3600s at the beginning of the week. Indeed, Cable trades with a mild downward bias amid decent gains in the Greenback as investors remain wary of upcoming US data releases and the Jackson Hole event.

EUR/USD remains sidelined above 1.1650

EUR/USD trades on the defensive following the closing bell on Wall Street on Monday, hovering around the 1.1660 region and adding to Friday’s small decline. The pair’s pullback comes in response to an acceptable rebound in the US Dollar in a context of generalised caution ahead of key US data releases and Chair Warsh’s speech in Jackson Hole.

Gold retreats from mid-May highs; fails ahead of $4,700 as Fed risks support USD

Gold touched a fresh high since May 14, during the Asian session on Tuesday, though it struggled to capitalize on the move and failed to break the $4,700 mark. The initial downward push on US bond yields due to the Treasury Department's expanded buyback strategy turned out to be short-lived amid concerns over the growing US national debt, which crossed $40 trillion.

Ethereum: BitMine scoops 32K ETH, hints at further gains

Ethereum (ETH) treasury company BitMine Immersion Technologies (BMNR) expanded its digital asset holdings last week with another round of acquisitions. The firm purchased 32,447 ETH during the week, lifting its holdings to 5.847 million ETH. That represents its largest purchase since the first week of July.

Will Jackson Hole ignite Gold and Silver’s next explosive breakout?

The 2026 Jackson Hole Economic Policy Symposium arrives at a pivotal moment. The U.S economy faces record debt, elevated borrowing costs, a weaker dollar and renewed momentum across hard assets. For The Gold & Silver Club, the backdrop increasingly validates its early-year call: “2026 will be the Year of Hard Assets.”

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.