FX.co ★ Euro Heads for Monthly Gain on Strong Eurozone Data

The euro held above $1.15, trading near its highest level since June 16 and on track for a monthly gain of 0.8%, supported by stronger-than-expected eurozone data. The bloc’s economy expanded by 0.4% in Q2, beating forecasts of 0.2% and marking its fastest pace of growth since early 2025.

At the same time, inflation accelerated across the euro area’s largest economies in July, heightening concerns that higher energy costs could feed through into services and core prices. In response, markets have fully priced in the European Central Bank’s deposit rate reaching 2.75% by early 2027, implying two additional rate increases, with the first potentially coming as soon as September.

In the US, the Federal Reserve left interest rates unchanged this week, though three FOMC members dissented in favor of a hike. Markets now see roughly a 65% probability of a rate increase in September.

Meanwhile, oil prices declined as energy shipments continued to flow through key maritime routes, despite limited progress in US–Iran negotiations.