The euro is trading flat against the dollar at the start of the European session, holding above the 1.09 level and near the five-month high reached on Tuesday. The single currency has appreciated by nearly five per cent this month, driven by growing demand as plans to increase budget flexibility within the eurozone and boost defence spending—particularly in Germany—gain traction. However, the euro’s gains are also attributed to a weaker US dollar. The greenback has been losing ground across the board against major currencies, reflecting increasing trader anxiety amid rising recession risks in the US. Market confidence has been shaken by the fallout from Trump’s erratic stance on tariffs, which is undermining economic sentiment. In this context, progress in negotiations for a diplomatic resolution to the conflict in Ukraine could further support the euro against the dollar. Meanwhile, upcoming US inflation data, released later today, may influence expectations regarding the Federal Reserve’s monetary policy and impact the correlation between the world’s leading currencies.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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