Euro Strengthens as Weak US Labor Data and Lower Oil Prices Weigh on Fed Hike Bets

The Euro strengthened against the US Dollar on Wednesday as weak labor market data and lower oil prices weighed on expectations for a Federal Reserve rate hike in September.

Eurozone inflation pressures are moderating, with falling oil prices reducing the need for another European Central Bank interest rate increase. The EUR/USD pair traded around 1.1554, up nearly 0.20% on the day, after the US reported a weaker-than-expected ADP Employment Change of 44K in July.

The Federal Reserve's decision on whether to raise interest rates will be closely watched ahead of Friday's Nonfarm Payrolls report, which could provide fresh clues about the US labor market. According to the CME FedWatch Tool, traders now price in around a 56% chance of a September rate hike, down from 67% a day earlier.