EUR/USD is strengthening and appears on track to test its July peak at 1.1829, supported by solid Eurozone data and a stable policy stance from the European Central Bank (ECB), according to FX analysts at Brown Brothers Harriman (BBH). At the same time, a more dovish outlook from the Federal Reserve continues to favor the euro.
ECB Supportive as Eurozone Data Holds Firm
The ECB’s current stance—keeping interest rates steady—has helped reinforce euro resilience. Labor costs in the Eurozone rose by 3.6% year-over-year in Q2, up from 3.4% in Q1. However, the ECB’s wage tracker suggests that wage growth is beginning to slow, which aligns with the central bank’s 2% inflation target.
Improving Sentiment in Germany
In addition to wage data, investor sentiment in Germany has also improved. The ZEW economic sentiment index rose to 37.3 in September, well above expectations of 25.0 and up from 34.7 in August. This unexpected rise reflects continued strength in economic activity across the region.
Conclusion
The combination of steady ECB policy, improving Eurozone fundamentals, and relatively dovish Fed signals continues to support the bullish momentum in EUR/USD.