The euro advanced against a basket of major and minor currencies during European trading on Friday, extending its gains against the US dollar for a second consecutive session and moving closer to posting a weekly gain.
The single currency has been supported by renewed weakness in the US dollar following softer-than-expected US employment data, which reduced expectations that the Federal Reserve will raise interest rates later this year.
Investors are also closely watching remarks from European Central Bank President Christine Lagarde later today for fresh clues about inflation trends and the outlook for monetary policy in the eurozone.
The Price
EUR/USD rose 0.1% to $1.1445 from an opening level of $1.1432, after touching an intraday low of $1.1421.
The euro gained 0.5% against the dollar on Thursday, recording its first daily advance in three sessions and its strongest one-day gain since May, following the release of weaker-than-expected US employment figures.
Weekly Performance
As of Fridays trading, the euro is up approximately 0.55% against the US dollar for the week and is on track to record its first weekly gain in the past three weeks.
US Dollar
The US Dollar Index fell 0.1% on Friday, extending losses for a second straight session and trading near a two-week low of 100.56 points, reflecting continued weakness in the greenback against a basket of major currencies.
Junes disappointing US employment report prompted markets to scale back expectations for additional Federal Reserve tightening, although investors continue to await further economic data for confirmation.
US job growth slowed sharply in June, with nonfarm payrolls increasing by just 57,000 jobs, well below market expectations for a gain of 110,000. Meanwhile, the labor force participation rate fell to 61.5%, its lowest level in more than five years.
Following the report, CME FedWatch pricing showed that the probability of the Federal Reserve leaving interest rates unchanged at its July meeting increased from 71% to 82%, while the probability of a 25-basis-point rate hike fell from 29% to 18%.
Market expectations for unchanged rates at the December meeting also rose from 15% to 22%, while the probability of a quarter-point hike declined from 85% to 78%.
European Interest Rates
ECB President Christine Lagarde said on Wednesday in Sintra, Portugal, that risks surrounding inflation and economic growth in the eurozone had become more balanced than they were a few weeks ago, helped by the recent decline in oil prices.
Official eurozone inflation data showed a larger-than-expected slowdown in consumer price growth during June, supported by lower fuel prices following the end of the Iran conflict.
Following those comments and inflation figures, money markets reduced the probability of a 25-basis-point ECB rate hike in July from 30% to just 5%.
Investors are now awaiting additional eurozone data on inflation, unemployment, and wage growth to reassess the outlook for monetary policy.
Christine Lagarde
At 08:00 GMT, ECB President Christine Lagarde is scheduled to deliver a speech at the Aix-en-Provence Economic Meetings in France.
Her remarks may provide further insight into inflation developments across the eurozone and the ECBs outlook for interest rates during the remainder of the year.