Euro Surpassed $1.17, 4-Year High in FX Market
The European currency, the euro, continued to appreciate against the US dollar in FX market, surpassing $1.17 and reaching a fresh 2021 high, bolstered by a general weakness in the dollar.
EURUSD increased to a near 4-year high of $1.17, according to FX trading data at the close of session on Friday. Over the past 4 weeks, Euro US Dollar gained 3.98%, and in the last 12 months, it increased 9.61%.
On the economic front, the Ifo business climate for Germany improved to the highest in nearly a year but flash PMIs painted a mixed picture, with private sector activity in the Euro Area showing signs of stabilization.
Meanwhile on the monetary policy front, analysts continue to expect a 25 basis points rate cut by the European Central Bank (ECB) before the year end.
President Lagarde said that “at the current interest-rate levels, we believe that we are in a good position to navigate the uncertain circumstances” while Governing Council member Villeroy de Galhau said that the ECB could still cut interest rates in the next half year.
In parallel, NATO’s decision to increase defense spending from 2% to 5% of GDP by 2035 has raised expectations that countries, particularly Germany, will ramp up borrowing to meet these targets.
On the fiscal front, Germany has approved its 2025 budget and 2026 fiscal framework, which includes record investment plans aimed at stimulating growth.
These plans feature increased spending and faster implementation than originally anticipated. Meanwhile, analysts continue to predict a 25-basis-point rate cut by the ECB before the year’s end.
Elsewhere, the Euro Area services confidence indicator rose to 2.9 in June of 2025 from a revised 1.8 in the previous month, the highest since February, and firmly above market expectations of 1.6 to reflect a slight recovery in services sentiment.
The result was in line with other surveys that see a higher degree of optimism in the sector, supported by pledges of greater investment from Eurozone members and softer concerns of trade barriers with the US.
The evolution of demand over the prior three months showed improvement (3.5 vs 1.8 in May), lifting the overall assessment of business situation (0 vs -1.7). Still, firms remained cautious on the future, as expectations of demand over the next three month softened. #Euro Surpassed $1.17, 4-Year High in FX Market#
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