Euro Hits Multi-Week High as US Dollar Weakens

The EUR/USD currency pair rallied to a high of approximately 1.1588, marking a peak not seen in four to eight weeks. The euro's ascent was driven by a weakening US dollar following a decline in the University of Michigan’s preliminary consumer sentiment index to 51.0 for August. This downward trend was compounded by the Federal Reserve Bank of Atlanta and the Federal Reserve Bank of New York lowering their US GDP growth forecasts, which led traders to reduce the probability of a September Federal Reserve rate hike from 50% to 30%.

Technical analysis indicates the pair is trading above its 100 and 200 simple moving averages, with support holding above 1.1500. While positive eurozone economic data supports the euro, its gains are tempered by shipping disruptions in the Strait of Hormuz and high European natural gas prices. Market participants are currently monitoring a scheduled speech by Philip Lane of the European Central Bank and the August 2026 NY Empire State Manufacturing Index.

Financial institutions maintain divergent outlooks for the pair. UBS predicts the EUR/USD will reach 1.20 by the second quarter of next year, while ING Group views the euro as slightly undervalued with a short-term fair value between 1.160 and 1.1650.