Euro Rallies as Weaker US Dollar Meets Robust Eurozone Growth

The Euro has strengthened against the US Dollar as the Greenback remains under pressure. The EUR/USD pair trades around 1.1626, buoyed by a softer US Dollar and stronger-than-expected Eurozone GDP data. The Eurozone economy expanded 0.6% QoQ in the second quarter, beating earlier estimates and market forecasts.

The upcoming European Central Bank (ECB) monetary policy announcement on Thursday is expected to raise its Deposit Facility Rate by 25 basis points to 2.50%, marking its second increase this year. Strategists at Brown Brothers Harriman note that the ECB's September macroeconomic projections will show little change in Eurozone GDP and inflation forecasts.

The US Dollar Index (DXY) hovers near two-week lows around 98.91, down 0.25% on the day. The broad Japanese Yen strength outweighs support from hawkish Federal Reserve expectations and geopolitical tensions, with the USD/JPY falling to a seven-month low near 154.50.