• The Euro strengthens against the US Dollar amid broad-based weakness in the US currency.
• The European Central Bank’s message of monetary stability supports the single currency.
• Political uncertainty and rate-cut expectations continue to weigh on the US Dollar.

EUR/USD trades around 1.1740 on Monday at the time of writing, up 0.25% on the day. The pair benefits from renewed interest in the Euro (EUR) in an environment marked by a weaker US Dollar (USD), as investors adjust their positioning amid ongoing macroeconomic and monetary uncertainty in the United States (US).

The current momentum is largely driven by persistent pressure on the Greenback. Markets remain concerned about a gradual slowdown in the US economy, as several recent indicators point to cooling conditions in the labor market. These signals reinforce expectations of monetary easing by the Federal Reserve, limiting the USD’s rebound potential. In addition, political and fiscal uncertainty in Washington continues to undermine investor confidence in the US Dollar.

On the European side, the Euro is supported by a more stable backdrop. The European Central Bank (ECB) maintains a wait-and-see stance after confirming a steady policy outlook last week. ECB President Christine Lagarde stated that monetary policy is in a “good place” and that interest rates are likely to remain unchanged for a prolonged period. This message of continuity, combined with slightly upgraded growth and inflation projections, improves market visibility and supports the single currency.

Several European Central Bank officials echoed this view earlier in the day, highlighting a more balanced assessment of risks to growth and inflation in the Eurozone, despite economic activity remaining subdued. This contrasts with the more uncertain US environment contributes to the upside bias in EUR/USD.

In the near term, investors remain focused on upcoming US macroeconomic releases, particularly growth and inflation data, which could influence Federal Reserve (Fed) policy expectations and, in turn, the direction of the US Dollar. For now, the relative clarity around European Central Bank policy compared with the Federal Reserve continues to favor the Euro against the US Dollar.