"In recent trading sessions, EUR/USD has posted fairly positive performance, with the pair currently trading around the 1.187-1.190 range, approaching its highest level in more than five months and rising by nearly 2.4% over the past week from earlier lows. Over a longer horizon, EUR/USD has also gained approximately 13.37% over the past 12 months, reflecting the euro's relative strength amid periods of sustained U.S. dollar weakness."
"At times, U.S. economic data have pointed to a moderation in activity, prompting markets to price in the possibility of a more cautious policy stance from the Fed. This has reduced the appeal of the dollar as a safe-haven asset. According to several UBS currency strategy reports, the euro could continue to strengthen and potentially approach around 1.20 USD/EUR by the end of 2026, under a scenario of prolonged U.S. dollar weakness."
"Meanwhile, on the Eurozone side, the economic backdrop appears stable but not particularly strong. Recent economic sentiment surveys, such as the ZEW Economic Sentiment Index, showed expectations exceeding forecasts, with a reading of around 40.8 compared with the expected 35.2, indicating an improvement in market sentiment toward the European economic outlook. Nevertheless, manufacturing activity across the region continues to face challenges in certain sectors, with the manufacturing PMI at times slipping below the expansion threshold, highlighting an uneven recovery."
EUR/USD is trading around 1.187-1.190, nearing a five-month high after a roughly 2.4% weekly increase and about a 13.37% gain over the past 12 months. The appreciation has been driven mainly by U.S. dollar weakness as markets reassess Federal Reserve monetary policy expectations. Some U.S. data indicate moderating activity, prompting expectations of a more cautious Fed stance and reducing dollar safe-haven demand. UBS currency strategy reports suggest the euro could strengthen toward approximately 1.20 USD/EUR by end-2026 under prolonged dollar weakness. Eurozone sentiment has improved, but manufacturing shows uneven recovery with PMIs occasionally below expansion.
Read at London Business News | Londonlovesbusiness.com
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