Eurozone Growth Beats Forecasts as EUR/USD Hits Six-Week High

The EUR/USD pair has been trading near its highest level in six weeks at around 1.1450, after touching 1.1480 on Thursday following a stronger-than-expected second-quarter euro area GDP release.

The growth rate of the eurozone came in at 0.4% quarter on quarter, exceeding forecasts and beating every published estimate. This is the strongest quarterly growth rate since early 2025. The country breakdown shows Spain leading the major economies with a growth rate of 0.7%, while Germany, France, and Italy each expanded by 0.2%. Ireland recorded the strongest quarterly reading in the bloc.

The improved economic outlook has had an immediate impact on financial markets, as it reduces concerns about recession in the eurozone. This development is particularly significant for the European Central Bank's (ECB) tightening bias, which was previously constrained by growth fragility. The ECB's own 2026 growth forecast sits near 0.8%, and hiking aggressively into a near-recessionary economy risks real damage.

The second leg of Thursday's euro bid came from national inflation flashes, with both German and Spanish preliminary July CPI prints coming in above expectations. German inflation rose to 2.8% year on year, while Spanish inflation hit 3.5%, its highest reading since May 2024.