Euro Heads for Monthly Gain on Strong Eurozone Data

The euro remains steady above the $1.15 mark as the currency tracks toward a 0.8% monthly gain. This performance stems from stronger economic results across the eurozone, where growth reached 0.4% in the second quarter. That figure beat market predictions of 0.2% and represents the fastest expansion in the region since early 2025.

Inflation remains a significant point of concern. Prices accelerated throughout the largest economies in the bloc during July, largely due to higher energy costs. These expenses now threaten to spill over into core price indexes and services. Because of these inflationary pressures, investors expect the European Central Bank to increase its deposit rate to 2.75% by early 2027.

Market participants anticipate two additional hikes, with the first potentially occurring in September. Meanwhile, the Federal Reserve kept interest rates steady this week, though three members of the committee dissented. Traders currently place the likelihood of a US rate hike in September at approximately 65%.