The Euro weakened slightly against the U.S. dollar, sliding by 0.21% to $1.1631, as investors anticipate the release of key Eurozone GDP and inflation data later this week.
The foreign exchange market entered a pivotal phase with major global events lined up, including trade discussions between the United States and China, monetary policy meetings, and crucial economic reports across Europe.
Global Market Sentiment
Market optimism increased following renewed progress in U.S.–China trade negotiations. Investors are closely watching the expected meeting between U.S. President Donald Trump and Chinese President Xi Jinping, where both sides aim to finalise the framework for a preliminary trade deal.
Analysts at major FX firms noted that the euro has found strong support near $1.1575, though it needs to break above the $1.1655–$1.1670 range to regain a bullish trend.
As of Tuesday, EUR/USD remained below $1.1650, with roughly €640 million in options set to expire at that level.
Economic Outlook and Central Bank Policy
Forecasts suggest the Eurozone economy grew by only 0.1% in the third quarter, mirroring its Q1 performance, while annual growth is expected to ease from 1.5% to 1.2%.
The European Central Bank (ECB) is widely expected to maintain its current interest rates when it meets on Thursday, as policymakers monitor inflationary trends. Conversely, the U.S. Federal Reserve may opt to cut interest rates in response to soft labour data and weaker-than-expected inflation figures.
Later in the week, the Euro Area will release its flash Q3 GDP figures and October inflation data, which could shape market sentiment moving forward.
Meanwhile, analysts at ING Bank, including Chris Turner, said China’s continued strengthening of the yuan has been “mildly negative for the dollar.” The People’s Bank of China fixed its reference rate at 7.0881 yuan per dollar on Monday, slightly stronger than Friday’s 7.0928 yuan, signaling Beijing’s intent to stabilize its currency amid global market volatility.
