Euro Hits Weekly Highs on Ukraine Talks, US Data Weakness

The euro has gained strength against the U.S. dollar amid optimism about potential peace talks between President Donald Trump and Russian President Vladimir Putin that could lead to a ceasefire in Ukraine, as well as expectations of monetary easing by the Federal Reserve. EUR/USD reached levels above 1.16, near weekly highs, driven by weaker U.S. economic data and speculation of rate cuts, with the probability of a September Fed rate cut exceeding 90%. The U.S. dollar has suffered losses due to concerns about political partisanship and disappointing employment figures, while Fed officials, including Minneapolis Fed President Neel Kashkari, have signaled support for easing to address a slowing economy. European markets also anticipate the Bank of England's policy meeting, with expectations of a rate cut, though some policymakers express caution due to inflation concerns. The prospect of a peace deal is seen as beneficial for European consumer and construction sectors, as well as Eastern European economies likely to benefit from reconstruction efforts. Overall, geopolitical developments and dovish central bank signals are key factors influencing currency markets and economic sentiment.