FX.co ★ Euro Slides on Weak German Ifo Data

The euro weakened towards $1.178, retreating from a four-year peak of $1.192 reached on September 17, influenced by unexpectedly weak German sentiment impacting the currency. The Ifo Business Climate Index declined by 1.2 points to 87.7 in September, marking its lowest level since May, and fell short of market expectations of 89.3. This occurred following a mixed HCOB PMI survey highlighting the Eurozone's private sector growth in September, driven by stronger-than-anticipated performance in the services sector, whereas manufacturing regressed into contraction. Concurrently, investors analyzed comments from Federal Reserve Chair Jerome Powell, who maintained a cautious view on future interest rate decisions amid ongoing inflation pressures arising from tariffs and a cooling labor market. Money markets are now pricing in over a 90% likelihood of a Federal Reserve rate cut in October, with the focus shifting to Friday's US PCE price index for further direction.