Euro Buoyed by Weaker Dollar Ahead of ECB Rate Decision
The EUR/USD pair has maintained its modest gains at the start of North American trading hours on Monday, buoyed by a softer US Dollar and stronger-than-expected Eurozone GDP data. The Greenback remains under pressure due to broad Japanese Yen strength, outweighing support from hawkish Federal Reserve expectations and geopolitical tensions.
The release of robust employment data has heightened anticipation for the upcoming US inflation figures, with traders pricing in around a 58% chance of a rate hike at the September 15-16 meeting. The European Central Bank's monetary policy announcement on Thursday is also expected to impact market sentiment, with strategists at Brown Brothers Harriman noting that 'the Eurozone macro backdrop argues in favor of bringing the policy rate closer to the upper end of the ECB's 1.75%-3.00% neutral range.'
The EUR/USD pair currently trades around 1.1626, while the US Dollar Index (DXY) hovers near two-week lows around 98.91, down 0.25% on the day. The pair's upside may remain limited ahead of the ECB announcement, as investors await clarity on the Fed's policy decision.
West Texas Intermediate (WTI) oil prices have risen to $90.50 per barrel, close to their highest level since July 24. Geopolitical tensions have increased following a US military strike on Iranian crude Oil tankers over the weekend and reports of further strikes in Saudi Arabia.