EUR/USD: EUR Weakens Against USD Amidst Renewed Risk-Off Sentiment

At the beginning of the week, the Euro (EUR) faced a downward bias against the US Dollar (USD), causing the EUR/USD pair to revisit the sub-1.1000 region as European markets opened on Monday.

On the other hand, the Greenback managed to regain strength after two consecutive daily pullbacks, pushing it beyond the 102.00 level, following the release of Friday’s Nonfarm Payrolls figures, which showed an increase of 187,000 jobs in the US. While the job creation figure fell short of initial projections, steady wage growth and an improved jobless rate of 3.5% indicated that the US labor market remained resilient.

The prevailing risk-off sentiment also contributed to the Dollar’s resurgence. Moreover, comments from Michelle Bowman, a member of the Federal Open Market Committee (FOMC), supported the Dollar’s bid bias. Bowman advocated for further rate hikes at the next meeting in case disinflationary pressures stall, contrasting with speculation that the July rate hike might have been the last for the foreseeable future. These comments added to the Greenback’s strength.

Conversely, the likelihood of the European Central Bank (ECB) implementing further tightening measures beyond the summer seemed to lose momentum, dampening the Euro’s outlook.

In terms of economic data, Germany’s Industrial Production contracted by 1.5% MoM in June and 1.8% over the past twelve months, signaling challenges in the German manufacturing sector. On a positive note, Investor Confidence, as tracked by the Sentix index, showed improvement, reaching -18.9 for the month of August.

Overall, the Euro struggled against the US Dollar amid the renewed risk-off sentiment and the Dollar’s regaining strength, influenced by the FOMC’s member’s rate hike comments. As markets continue to digest economic data and central bank statements, further developments may determine the direction of the EUR/USD pair in the coming days.