Euro Hits Multi-Year Peak Before Dollar Rebounds: ECB Forum and US Data in Focus

The EUR/USD currency pair surged to a multi-year high of 1.1830, its strongest level since September 2021, before retreating slightly as robust US economic data bolstered the US Dollar. The Eurozone’s stabilizing inflation, with headline CPI reaching the European Central Bank’s (ECB) 2% target and core inflation steady at 2.3%, fueled optimism about the region’s economic outlook. However, stronger-than-expected US ISM Manufacturing PMI and JOLTS Job Openings data lifted the US Dollar Index from 96.38 to 96.82, tempering the Euro’s gains. As markets digest these developments, attention is turning to the ECB Forum in Sintra, Portugal, where central bankers, including Federal Reserve Chair Jerome Powell, are sharing critical insights on monetary policy.

The Euro’s ascent was underpinned by encouraging Eurozone data. The HCOB Eurozone Manufacturing PMI rose to 49.5 in June from 49.4 in May, marking its highest level in nearly three years and signaling a slower contraction in factory activity. Meanwhile, the Consumer Price Index (CPI) climbed to 2.0% year-on-year, aligning with the ECB’s target, while core inflation held steady at 2.3%, the lowest since January 2022. Speaking at the ECB Forum, ECB President Christine Lagarde acknowledged the achievement of the 2% inflation target but cautioned that global uncertainties, including geopolitical tensions and evolving corporate pricing strategies, are making inflation harder to predict. She emphasized a shift toward scenario-based policymaking to navigate these challenges, reinforcing the ECB’s commitment to medium-term price stability with increased flexibility.

In contrast, the US Dollar regained momentum following upbeat economic indicators. The ISM Manufacturing PMI edged up to 49 in June from 48.5, surpassing forecasts of 48.8, while JOLTS Job Openings soared to 7.769 million in May, exceeding expectations of 7.3 million and marking the highest level since November 2024. These figures highlighted resilience in the US economy, supporting the Dollar’s recovery. At the Sintra Forum, Fed Chair Jerome Powell’s remarks are under scrutiny, with investors seeking clues about the Federal Reserve’s next moves, particularly ahead of the upcoming Nonfarm Payrolls (NFP) report on Thursday. The interplay of these factors underscores the delicate balance central banks face in a volatile global environment, with EUR/USD now trading near 1.1773 as markets await further policy signals.