Euro Slips Under Pressure from Stronger Dollar

The weaker than expected Eurozone data weighs on market sentiment on Thursday. The euro fell against the U.S. dollar on Thursday, pressured by stronger American economic data and weaker confidence indicators in the Eurozone. The decline reflects growing concerns about slowing growth and persistent uncertainty across the European economy.


Confidence Drops, Money Supply Rises

Economic sentiment in the Eurozone unexpectedly slipped in February, with the confidence index falling by one point to 98.3, below expectations of a rise to 99.8. This decline highlights ongoing pressure on both businesses and consumers. At the same time, the money supply (M3) expanded by 3.3% year-on-year, the fastest pace in six months and above forecasts of 2.9%. A faster-than-expected increase in liquidity is often seen as a negative factor for the euro, raising the risk of future inflationary pressures.


ECB Policy Outlook


Markets remain convinced that the European Central Bank will keep interest rates unchanged at its upcoming meeting on March 19. Swap markets show less than a 1% chance of a rate cut, reflecting expectations that policymakers will hold steady while inflation remains above target.


Dollar Strengthened by U.S. Labor Data


The U.S. dollar gained support from fresh labor market figures. Weekly jobless claims rose modestly by 4,000 to 212,000, slightly below market expectations of 215,000. Despite the uptick, claims remain relatively low, signaling resilience in the labor market and reinforcing confidence in the U.S. economy.


Investors Watch the Road Ahead


With the euro under pressure from weak regional data and the dollar buoyed by stronger fundamentals, investors are closely monitoring upcoming releases to determine whether the euro’s weakness is temporary or the start of a broader trend. For now, the balance of risks favors the dollar, as U.S. economic stability contrasts with Europe’s fragile outlook.