EUR/USD tumbles to multi-week low as robust US data fuels US Dollar rally

• EUR/USD trades near 1.1475, its lowest level since June 23, marking a fifth straight daily decline.
• The Euro is pressured by a strong US Dollar and robust US economic data.
• US ADP jobs data beats forecasts, showing 104K job gains in July, reversing the prior month’s contraction.

The Euro (EUR) is on the back foot for a fifth straight day against the US Dollar on Wednesday, weighed down by a stronger Greenback and ongoing concerns over the recently announced US-EU trade deal, which many investors see as skewed in Washington’s favor. The Euro remains under pressure as attention turns to the Federal Reserve’s (Fed) policy decision due later on Wednesday.

The EUR/USD pair is edging lower, hovering near its weakest level since June 23. At the time of writing, the pair is trading around 1.1475 during the American trading hours, down over 2.0% so far this week. The bearish momentum reflects mounting pressure on the Euro amid a broad-based US Dollar strength, fueled by resilient US economic data and growing expectations that the Fed will keep interest rates unchanged for now.

A fresh batch of strong US economic data reinforced the bullish momentum behind the US Dollar, keeping EUR/USD pinned near multi-week lows. The ADP Employment Change report showed US private-sector jobs rose by 104,000 in July, surpassing the forecast of 78,000 and sharply reversing June’s contraction of -23,000 jobs (revised from -33,000).

Signs of economic resilience continued with the second-quarter Gross Domestic Product (GDP) Annualized coming in at 3.0%, well above the 2.4% consensus estimate and rebounding strongly from the prior quarter’s 0.5% contraction. The upbeat growth figures were complemented by the core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, which rose 2.5% QoQ in Q2, slightly above the expected 2.4%, though notably down from 3.5% in the prior quarter. Meanwhile, the GDP Price Index cooled to 2.0%, missing the 2.4% estimate, and headline PCE dropped to 2.1% from 3.7%, signaling further disinflation. The overall tone of the data suggests the US economy remains on solid footing with sticky core inflation, justifying the Fed’s wait-and-see approach.

Across the Atlantic, Eurostat’s preliminary estimate showed the Eurozone economy grew 0.1% in Q2, modestly ahead of expectations for flat growth. On an annual basis, the bloc expanded by 1.4%, supported by stronger performances in Spain, France, and Ireland, which helped offset minor contractions in Germany and Italy. Meanwhile, sentiment data from the Eurozone painted a slightly more upbeat picture for July, though it did little to lift the Euro’s fortunes. The Economic Sentiment Indicator (ESI) climbed to 95.8, its highest level in five months and ahead of market expectations of 94.5, suggesting some stabilization in business confidence. The Services Sentiment also improved to 4.1, beating forecasts of 3.3 and marking the most optimistic outlook since February. Additionally, Industrial Sentiment rose to -10.4 from -11.8, slightly better than the forecast of -11.2, while Consumer Confidence remained unchanged at -14.7, in line with earlier estimates.

Looking ahead, market focus will firmly shift to the Fed's monetary policy decision and Chair Jerome Powell’s press conference. While no change in interest rates is expected, traders will closely watch for clues on the timing and conditions for any future adjustments.