Forex Today: Euro selloff picks up steam, US Dollar ignores easing rate hike bets
Here is what you need to know on Monday, October 5:
The Euro (EUR) remains under heavy selling pressure at the beginning of the week as investors grow increasingly concerned about France's fiscal outlook. The European economic calendar will feature Producer Price Index (PPI) data for September and Sentix Investor Confidence for October. Later in the day, the Institute for Supply Management (ISM) will publish the US Services Purchasing Managers' Index (PMI) for September.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.46% | 0.09% | -0.14% | 0.04% | -0.15% | 0.41% | -0.02% | |
| EUR | -0.46% | -0.33% | -0.58% | -0.40% | -0.44% | -0.12% | -0.44% | |
| GBP | -0.09% | 0.33% | -0.25% | -0.07% | -0.10% | 0.19% | -0.11% | |
| JPY | 0.14% | 0.58% | 0.25% | 0.18% | 0.08% | 0.46% | 0.14% | |
| CAD | -0.04% | 0.40% | 0.07% | -0.18% | -0.08% | 0.25% | -0.07% | |
| AUD | 0.15% | 0.44% | 0.10% | -0.08% | 0.08% | 0.31% | 0.00% | |
| NZD | -0.41% | 0.12% | -0.19% | -0.46% | -0.25% | -0.31% | -0.32% | |
| CHF | 0.02% | 0.44% | 0.11% | -0.14% | 0.07% | -0.00% | 0.32% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Euro under pressure as fragmentation fears complicate ECB tightening path
Analysts at OCBC highlight that “rising fragmentation fears are tightening financial conditions through higher sovereign borrowing costs and wider risk premia,” with financial stability concerns increasingly competing with inflation risks. They caution that this dynamic “raises the risk that the European Central Bank (ECB) becomes more cautious on further policy tightening,” as the central bank weighs the impact of widening spreads on the broader Eurozone. Against this backdrop, OCBC notes that the Euro has come under “renewed pressure, with EURUSD falling to its weakest level since May 2025,” underscoring how fragmentation worries are feeding directly into currency weakness.
Reflecting the broad-based selling pressure surrounding the Euro, EUR/GBP falls more than 0.3%, EUR/JPY loses 0.6% and EUR/CAD declines 0.4% in the European morning.
On Friday, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) rose by 29K in September. This print followed the 133K increase recorded in August (revised from 162K) and missed the market expectation of 90K by a wide margin. Other details of the publication showed that the Unemployment Rate edged higher to 4.2% in this period, while the Labor Force Participation Rate rose to 61.8% from 61.6%.
Although the immediate reaction caused the US Dollar (USD) to weaken against its peers, it managed to regain its footing as the report also showed that annual wage inflation, as measured by the change in the Average Hourly Earnings, softened to 3%, coming in below analysts' estimate of 3.2%. Still, the probability of a 25 basis points (bps) Federal Reserve (Fed) rate hike in October declined below 20% following the employment report, as per the CME FedWatch Tool. After rising nearly 0.9% in the previous week, the USD Index stays in positive territory above 102.00 in the European session on Monday.
Economists at DBS argue that the recent “USD’s three-week rally is running out of monetary-policy fuel,” as senior Fed officials increasingly “have pushed back against expectations for a back-to-back hike at the October 28 FOMC meeting.” They note that “after softer US PCE inflation and nonfarm payrolls data, another concern is emerging,” with market attention likely to “rotate back towards the more uncomfortable reason long-dated Treasury yields are approaching pre-Global Financial Crisis highs.”
DBS stresses that “this distinction matters for the USD,” highlighting that “higher yields driven by Fed tightening can support the USD,” whereas “higher term premia driven by concerns over debt supply, fiscal sustainability, and Treasury-market credibility need not.”
Gold (XAU/USD) fell more than 3% and closed the second consecutive week in negative territory. The precious metal benefits from the risk-averse market atmosphere to start the week and clings to modest recovery gains above $4,160.
USD/JPY fluctuates in a tight channel above 157.50 in the early European session on Monday. Japanese Chief Cabinet Secretary Minoru Kihara said in a news conference during the Asian trading hours that there are no plans for a fresh release of crude oil from national reserves as the country had already released crude supplies, despite a G7 agreement to release 100 million barrels of diesel and crude from emergency reserves.
Euro FAQs
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%).
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.
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.
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.
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
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
