"The recent weakness in the greenback mainly reflects a return of "risk-on" sentiment following encouraging signals from budget negotiations in Washington, which have eased concerns over a potential U.S. government shutdown. As a result, capital has temporarily flowed out of safe-haven assets such as the dollar and back into risk assets like equities and commodities, allowing EURUSD to stage a notable technical rebound."
"To assess the pair's outlook, it is essential to examine conditions on both sides - the Eurozone and the United States. The Eurozone is undergoing a period of weak and uneven recovery, as major economies such as Germany, France, and Italy remain under pressure from high energy costs and subdued global demand. According to the European Commission's Autumn 2025 forecast, the bloc's GDP is expected to grow by only around 1.0%, indicating that growth remains well below potential."
EURUSD recovered from a low near 1.1470 after a temporary U.S. dollar weakness driven by renewed risk-on sentiment linked to encouraging U.S. budget negotiations. Capital moved out of safe-haven assets into equities and commodities, enabling a technical euro rebound. The Eurozone faces weak, uneven growth with major economies pressured by high energy costs and subdued global demand, and GDP growth near 1.0%. Inflation has eased to about 2.1% but remains supported by services and energy, creating an ECB policy dilemma between curbing inflation and avoiding deeper slowdown. U.S. GDP grew 3.8% (SAAR) in Q2 2025 with unemployment around 4.3%, underscoring U.S. economic resilience and favoring the dollar.
Read at London Business News | Londonlovesbusiness.com
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