Euro Rebounds as Weak US Jobs Data Weighs on Dollar

2026-10-02 13:03 By Joana Ferreira 1 min. read

The euro edged up to $1.126 after briefly falling to its lowest level in more than a year, as weaker-than-expected US jobs data weighed on the dollar.

The US economy added just 29,000 jobs in September, well below expectations of 90,000, boosting expectations that the Fed may keep rates unchanged at its upcoming meeting.

Meanwhile, Eurozone inflation accelerated to 3.8%, its highest since September 2023 and well above the ECB’s 2% target, driven largely by higher fuel prices.

Despite renewed inflationary pressures, concerns over France’s fiscal outlook continued to weigh on the euro after the government unveiled deficit-reduction plans that the fiscal watchdog described as based on “optimistic” assumptions.

Markets also expect the ECB to adopt a gradual approach to monetary tightening.

ECB official Isabel Schnabel said the coming months will be key to assessing the energy shock and determining the appropriate level of interest rates, signaling a cautious approach to further tightening.



News Stream
Euro Rebounds as Weak US Jobs Data Weighs on Dollar
The euro edged up to $1.126 after briefly falling to its lowest level in more than a year, as weaker-than-expected US jobs data weighed on the dollar. The US economy added just 29,000 jobs in September, well below expectations of 90,000, boosting expectations that the Fed may keep rates unchanged at its upcoming meeting. Meanwhile, Eurozone inflation accelerated to 3.8%, its highest since September 2023 and well above the ECB’s 2% target, driven largely by higher fuel prices. Despite renewed inflationary pressures, concerns over France’s fiscal outlook continued to weigh on the euro after the government unveiled deficit-reduction plans that the fiscal watchdog described as based on “optimistic” assumptions. Markets also expect the ECB to adopt a gradual approach to monetary tightening. ECB official Isabel Schnabel said the coming months will be key to assessing the energy shock and determining the appropriate level of interest rates, signaling a cautious approach to further tightening.
2026-10-02
Euro Holds Near Recent Low Despite Stronger Inflation
The euro remained below $1.13, close to its lowest level since May 2025, despite stronger-than-expected Eurozone inflation data. Annual inflation accelerated to 3.8% last month, its highest level since September 2023 and well above the ECB’s 2% target, driven largely by higher fuel prices. Despite the renewed inflationary pressure, the euro remains under pressure as markets expect the ECB to tighten monetary policy more gradually than the Federal Reserve. Further ECB rate hikes are priced in over the coming year, with the next move potentially coming as early as December. ECB Executive Board member Isabel Schnabel said Wednesday that the coming months would be important for assessing the impact of the energy shock and determining how high interest rates need to rise. Her comments suggest a cautious, wait-and-see approach as the US-Iran conflict enters its eighth month. The eurozone’s weak outlook could also limit aggressive ECB tightening, with GDP seen growing just 0.9% this year.
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Euro Slips to Fresh 15-Month Lows
The euro weakened below $1.13, its lowest level since May 2025, after falling more than 2% against the dollar in September, its sharpest monthly decline in 14 months. Markets expect the ECB to tighten more slowly than the Fed, with further ECB hikes priced in over the coming year and the next move potentially in December alongside updated economic projections. Meanwhile, inflation accelerated across several major European economies in September, driven largely by fuel prices. ECB member Isabel Schnabel said Wednesday that the coming months will help assess the energy shock and determine how high to take rates, suggesting the central bank’s most hawkish policymaker is taking a wait-and-see approach as the US-Iran war enters its eighth month. A subdued growth outlook could further constrain the ECB’s room for aggressive tightening. In France, the government unveiled a plan to cut the budget deficit, although the fiscal watchdog warned that its economic assumptions were “optimistic.
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