Euro Rises Against Dollar as Eurozone Growth Surpasses Expectations
The Euro strengthened against the US Dollar on July 31, 2026, due to strong economic data from the Eurozone. The region's GDP growth rate for Q2 was a significant 1.8% annualized, exceeding expectations and outperforming its flat reading in Q1.
Additionally, inflation in the Eurozone rose to 2.9% in July, up from 2.8% in June, driven primarily by energy price increases amid ongoing geopolitical tensions in the Middle East.
This robust economic performance has intensified speculation that the European Central Bank (ECB) will implement another 0.25 percentage point rate hike in September, bringing the policy rate to 2.50%. Benchmark 10-year sovereign bond yields also increased, with Germany's 10-year yield reaching 3.20% on July 31, 2026.
On the US side, the Federal Reserve held interest rates steady at 3.50%-3.75%, but showed internal division with three FOMC members dissenting for a rate hike. Fed Chair Kevin Warsh reiterated the commitment to the 2% inflation target, reinforcing a hawkish tone.