EUR/USD rises for the second consecutive day this week, increasing by more than 0.50% as the Dollar weakens, even in light of robust US economic data released today. The shared currency is supported by an enhancement in risk appetite, attributed to US President Donald Trump easing tariff threats on Europe. Currently, the pair is trading at 1.1743, having rebounded from daily lows of 1.1670.
EUR/USD rises more than 0.5% as enhanced risk appetite drives momentum The dollar is experiencing selling pressure, even in light of robust US growth data. The markets are currently reflecting a complete expectation of a Federal Reserve hold in January, with significantly diminished bets on easing by year-end. The ECB minutes bolster optimism regarding inflation’s return to target, thereby lending support to the shared currency.
> The Euro continues to strengthen as the alleviation of trade tensions between the US and Europe overshadows robust US economic data, putting pressure on the Dollar: The market is set to conclude Thursday’s session with gains supported by impressive Gross Domestic Product figures for the third quarter of 2025. The release of jobs data concurrently with a somewhat stable inflation figure diminished the likelihood of a rate cut by the Federal Reserve during the January meeting. Current data suggests that money markets anticipate the Federal Reserve will maintain rates at their current levels, with probabilities at 95%. As the year draws to a close, market participants anticipate a reduction of 42 basis points in interest rates, a decrease from the 60 basis points projected on January 7. The European Central Bank has released the minutes from its latest monetary policy meeting, revealing a consensus among members regarding the economic assessment. They noted that the underlying inflation indicators are in alignment with the central bank’s medium-term target of 2%. Additionally, it has been revealed that members of the European Union intend to proceed with unfreezing the trade deal with the US and will be voting on its ratification.
Latest FX Rate Trends: Traders overlook positive US data, propelling the Euro upward
- The US Department of Commerce has indicated that the Fed’s favored inflation measure, Core Personal Consumption Expenditures, increased by 2.7% year-over-year in October and saw a slight uptick to 2.8% in November, generally aligning with forecasts.
- The US Bureau of Economic Analysis reported that Q3 2025 GDP increased by 4.4% year-over-year, surpassing expectations of 4.3% and demonstrating a significant improvement from the 3.8% growth rate observed in Q2. The growth was propelled by increased exports and a reduced negative impact from inventories.
- For the week ending January 17, Initial Jobless Claims increased slightly to 200K from a revised 199K. However, this figure remains significantly lower than the anticipated 212K, as reported by the US Department of Labor.
- The recent minutes from the ECB meeting conveyed a dovish tone, with policymakers recognizing that while growth remains resilient, it is also vulnerable to geopolitical risks that may dampen sentiment, leading to a more risk-averse market stance. Inflation appears to be stabilized around the 2% target. Policymakers emphasized that the policy trajectory is not predetermined, upholding their commitment to a data-driven approach.
- The US Dollar Index, which monitors the performance of the American currency against six counterparts, has decreased by 0.50%, now standing at 98.29.