The Euro has shown renewed strength against the US Dollar, with EUR/USD trading firmer but remaining below the 1.1700 level, according to Brown Brothers Harriman’s Elias Haddad [1]. This recovery is attributed to stronger-than-expected economic data from the Eurozone, notably Germany’s IFO business climate survey, which rose to a one-year high of 88.8 in August, surpassing the consensus estimate of 87.2 and the previous reading of 86.7 in July [1]. The improvement in the IFO survey reflects more favorable current conditions and expectations, and aligns with positive signals from the Eurozone’s August PMI and ZEW surveys [1].
Haddad highlights that the combination of improving Eurozone economic activity and inflation remaining above target reinforces expectations for the European Central Bank (ECB) to raise interest rates at its September 10 meeting, with market pricing indicating a 95% probability of a hike [1]. In contrast, the US Federal Reserve faces risks that are tilted toward a more dovish stance, contributing to a widening rate gap between the EU and US, which has supported the recent upswing in EUR/USD at the end of July [1].
From a technical perspective, resistance for EUR/USD is noted near 1.1800, while immediate support is found at the 200-day moving average of 1.1632 [1]. No specific analyst opinions or forward-looking statements beyond the ECB rate hike expectations and technical levels are provided in the source [1].
CONCLUSION
Stronger-than-expected German and Eurozone data have bolstered the Euro and increased market confidence in a September ECB rate hike. The widening EU-US rate gap and dovish Fed risks further support the Euro’s recovery, though key resistance and support levels remain in focus.