Euro Steadies Below $1.18 as Trade Risks Loom and ECB Pauses

The euro slipped toward $1.17, retreating from a recent four-year high, as investors flocked to the dollar in response to a stronger-than-expected US jobs report.

At the same time, markets digested comments from European Central Bank policymakers and the minutes from the ECB’s latest policy meeting.

Speaking at the ECB Forum on Central Banking, President Christine Lagarde welcomed the June inflation print, which aligned with the central bank’s 2% target, but cautioned about “two-sided risks” linked to rising geopolitical tensions and increasing economic fragmentation.

Other ECB officials signaled that interest rates are likely to be kept on hold at this month’s meeting, following eight consecutive cuts to the deposit rate since June 2024, amid persistent concerns over global trade uncertainty, instability in the Middle East, and the euro’s recent appreciation.

Markets are now pricing in only one additional rate cut before year-end.

The euro's strength is positive for the eurozone economy despite speculation that European Central Bank officials are growing concerned over the single currency's appreciation, ING's Chris Turner says in a note. Such concerns would be that a stronger euro lowers import prices and brings down inflation while making eurozone exports more expensive, he says. However, Europe should be taking advantage of this "global euro moment" as previously hailed by ECB President Christine Lagarde, the analyst says. Global portfolios re-allocated to the eurozone "can only be a good thing for private sector borrowing costs." The euro trades flat at $1.1801 after hitting a nearly four-year high of $1.1829 on Tuesday, according to LSEG. (renae.dyer@wsj.com)

There are a couple to take note of on the day, as highlighted in bold.

With it being the final trading day of the week of sorts, since we do have a US holiday tomorrow, there are some large expiries to be wary of coinciding with the US jobs report release as well.

The first ones are for EUR/USD lumped around 1.1750 through to 1.1850. However, the massive one at 1.1800 is the most notable as warned yesterday. That is still putting a magnet on price action and will likely do so until we get to the non-farm payrolls data later in the day.

Then, there is one for USD/JPY at the 144.00 level. It's not the biggest of expiries but could well just keep a lid on price action alongside the 100-hour moving average at 143.95 currently.

And finally, there's one for USD/CAD at the 1.3600 level. The expiries here should help to keep price action more muted in European trading until we get to the US jobs report before dollar sentiment takes over.

As for tomorrow, the expiries board is relatively thin considering that broader markets are going to settle down a bit with US will be out until next week.

For more information on how to use this data, you may refer to this post here. This article was written by Justin Low at www.forexlive.com.

There are a couple to take note of on the day, as highlighted in bold.

With it being the final trading day of the week of sorts, since we do have a US holiday tomorrow, there are some large expiries to be wary of coinciding with the US jobs report release as well.

The first ones are for EUR/USD lumped around 1.1750 through to 1.1850. However, the massive one at 1.1800 is the most notable as warned yesterday. That is still putting a magnet on price action and will likely do so until we get to the non-farm payrolls data later in the day.

Then, there is one for USD/JPY at the 144.00 level. It's not the biggest of expiries but could well just keep a lid on price action alongside the 100-hour moving average at 143.95 currently.

And finally, there's one for USD/CAD at the 1.3600 level. The expiries here should help to keep price action more muted in European trading until we get to the US jobs report before dollar sentiment takes over.

As for tomorrow, the expiries board is relatively thin considering that broader markets are going to settle down a bit with US will be out until next week.

For more information on how to use this data, you may refer to this post here. This article was written by Justin Low at investinglive.com.

There are just a couple to take note of on the day, as highlighted in bold.

That being for EUR/USD at the 1.1775 and 1.1800 levels. The one at the figure level is in focus again, similar to yesterday and will also be a factor tomorrow with nearly €8 billion in expiries rolling off just before the long weekend in the US. The expiries are likely to place a magnet on price action ahead of the US jobs report tomorrow at least. That unless we get any major headline surprises to shake things up.

However, do keep an eye out for dollar sentiment in general. It is on the softer side still and we could yet see further vulnerabilities or perhaps some positioning plays before the non-farm payrolls data.

For more information on how to use this data, you may refer to this post here. This article was written by Justin Low at www.forexlive.com.

There are just a couple to take note of on the day, as highlighted in bold.

That being for EUR/USD at the 1.1775 and 1.1800 levels. The one at the figure level is in focus again, similar to yesterday and will also be a factor tomorrow with nearly €8 billion in expiries rolling off just before the long weekend in the US. The expiries are likely to place a magnet on price action ahead of the US jobs report tomorrow at least. That unless we get any major headline surprises to shake things up.

However, do keep an eye out for dollar sentiment in general. It is on the softer side still and we could yet see further vulnerabilities or perhaps some positioning plays before the non-farm payrolls data.

For more information on how to use this data, you may refer to this post here. This article was written by Justin Low at investinglive.com.