Euro Climbs as US Data Weakens the Dollar Ahead of Key Inflation Report

The Euro strengthened against the US Dollar on Wednesday, reaching levels not seen in nearly six weeks, as recent US economic data weighed on the Greenback. Investors are increasingly cautious amid signs of slowing momentum in the US services sector and softer private hiring, which have fueled expectations of a more dovish stance from the Federal Reserve.

Recent reports showed modest expansion in the US services sector, but the details suggested underlying weakness. New orders slowed, employment in the sector contracted for the sixth consecutive month, and price pressures eased. Meanwhile, private payrolls fell by 32,000 in November, signaling a cooling labor market that missed expectations for modest gains.

This combination of mixed economic signals has reinforced market bets that the Federal Reserve may consider easing interest rates in the near term. Traders are now focused on the upcoming Personal Consumption Expenditures (PCE) inflation report, the final key indicator before next week’s policy decision.

The softer US data is giving the Euro room to advance, while other major currencies, including the British Pound, are also benefiting from the Dollar’s weaker footing. Market sentiment suggests that investors are positioning for continued volatility as central banks weigh their next moves in a complex and uncertain economic environment.