The EUR/USD pair continued its rise, surpassing the 1.1770 level, supported by broad weakness in the U.S. dollar amid uncertainty stemming from the federal government shutdown in the United States, which kept pressure on the greenback. The shutdown resulted from the failure of the two main parties to reach an agreement on government funding, raising concerns over potential delays in the release of key economic data such as the nonfarm payrolls report, a crucial element in assessing the Federal Reserve’s monetary policy stance.
On the economic front, recent data failed to support the dollar, as U.S. job openings showed only a slight increase in vacancies, accompanied by weaker hiring momentum, reinforcing fears of a slowing labor market. Private-sector employment data is expected to reveal weak growth, reflecting a clear decline compared to last year’s levels.
Meanwhile, European markets are focused on preliminary September inflation data in the Eurozone, with expectations for the annual inflation rate to rise to 2.2% from 2% in August, while core inflation is projected to remain steady at 2.3%. German inflation, in particular, came in higher than expected, with the consumer price index accelerating to 2.4% year-on-year, boosting expectations for similar readings across the Eurozone.
This strong inflation performance may strengthen the position of hawkish members of the European Central Bank advocating for continued monetary tightening, providing additional support for the euro—especially against the backdrop of persistent U.S. dollar weakness and mounting political and economic pressures in the United States.
Overall, the euro continues to benefit from dollar weakness, as markets await inflation readings that could shape the future direction of monetary policy in both Europe and the United States.
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