Eurozone: Resilient data but growth risks weigh on Euro – Rabobank

FXStreet Insights Team FXStreet

Rabobank's Senior FX Strategist Jane Foley notes Eurozone Q2 Gross Domestic Product (GDP) and Purchasing Managers' Index (PMI) data surprised to the upside, suggesting resilience despite higher energy prices and supply disruptions. However, Foley warns that the breakdown of the US–Iran agreement, expectations of further European Central Bank (ECB) tightening, competition from China, and a loosening German labour market pose downside growth risks and could limit Euro (EUR) strength, especially via weaker consumer spending.

Resilient growth faces new headwinds

"Eurozone Q2 GDP growth was stronger than expected at 0.4% q/q, compared with a median expectation of 0.2% q/q."

"Despite higher energy prices and supply disruptions implied by the (near) closure of the Strait of Hormuz, it would appear that the Eurozone economy has weathered the headwinds better than expected."

"The breakdown in this agreement clearly implies downside risks to growth and upside inflation concerns."

"Germany’s adjusted unemployment rate ticked higher in July to 6.4% from 6.3% in June, pushing the overall number of unemployed people over the 3 mln mark on an unadjusted basis."

"The loosening of the labour market has resulted in a considerable slowdown in growth of real compensation of employees which, in RaboResearch’s view, suggests that consumer spending could stagnate for the rest of the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD: The 0.7000 level holds the downside…for now

AUD/USD has clinched its fourth consecutive daily pullback on Thursday, coming closer to the key 0.7000 region while breaking below the critical 200-day SMA at the same time. The Aussie’s decline comes on the back of further gains in the Greenback in a context of rising yields and Fed rate hike bets.

USD/JPY keeps the red near 158.00 as Japanese Yen firms up

USD/JPY retreats from three-week highs and holds losses near 158.00 in the Asian session on Thursday. Surging Japanese bond yields lift the Yen amid looming intervention risks, while the US Dollar preserves overnight gains to a two-month high amid hawkish Fed bets and elevated US bond yields.

Gold bounces off lows, still below $4,300

Gold builds on Wednesday’s retracement, briefly slipping back below $4,250 per troy ounce to attempt a lacklustre rebound afterwards. The better tone in the US Dollar, rising US Treasury yields and expectation of extra rate hikes by the Fed continue to weigh on the precious metal in the latter part of Thursday’s NA session.

XRP is flashing three bullish signals heading into a historically weak October

XRP (XRP) is still flashing 3 bullish signals across its holders, derivatives, and ETF data. These signals come as the token gave back part of its September gains on Thursday. The token traded near $1.50 at press time, down about 6.3% over 24 hours, according to BeInCrypto Markets data. The pullback still leaves XRP up over 15.6% on the week, a gain that tracks a broader market rally.

Advanced economies: From one example of resilience to another

History tends to repeat itself in advanced economies. Once again, growth ultimately fell short of expectations by only a small margin in the first half of 2026, despite the conflict in Iran. As early as 2025, the impact of tariffs was less severe than feared.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.