FX.co ★ Euro Holds Narrow Range Late August

The euro maintained its position above the 1.165 threshold through the end of August, retaining much of its upward movement for the year as global rate outlooks were evaluated and the European Central Bank's (ECB) potential response to ongoing concerns about slowing growth was considered. Recent pricing data revealed that EU-harmonized inflation fell slightly below expectations in France and Italy, whereas it met predictions in Spain. Rate futures continued to show a predominant market view anticipating no further rate cuts from the ECB this year. Nevertheless, persistent worries about soft growth and challenges from U.S. tariffs led some market participants to speculate on the possibility of a rate reduction in the fourth quarter. The euro appreciated by 11% against the dollar this year, driven by EU countries signaling plans to boost spending on industry, infrastructure, and defense. Concurrently, uncertainties in U.S. economic policy and fiscal pressures prompted a shift away from the dollar.