- EUR/USD rebounds from intraday lows near 1.1700 but remains under pressure.
- UoM Consumer Sentiment drops to 55.4, missing estimates and marking a four-month low.
- Russia and Belarus launched the Zapad-2025 military drills on Friday, prompting Poland to close border crossings with Belarus.
The Euro (EUR) trades on the back foot against the US Dollar (USD) on Friday, with EUR/USD hovering around 1.1720, stabilizing after dipping to intraday lows near 1.1700.
The mild recovery comes as the Greenback eases from session highs after the University of Michigan’s preliminary September survey revealed weakening consumer confidence alongside sticky inflation expectations.
The headline Consumer Sentiment Index fell to 55.4 in September, down from 58.2 in August and missing the market forecast of 58, marking the weakest reading since May. The Consumer Expectations Index slipped to 51.8 from 55.9, undershooting expectations of 54.9, while the Current Conditions gauge eased to 61.2 from 61.7.
On the inflation front, the one-year outlook remained unchanged at 4.8%, but the five-year measure climbed to 3.9% from 3.5%, highlighting persistent long-term price concerns. The data reinforced the view that US households are increasingly worried about the economic outlook, even as inflation expectations stay uncomfortably high.
The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, trades near 97.67, retreating from an intraday high of 97.86. While off its peak, the index remains broadly firm, keeping the Euro’s recovery attempts limited.
Across the Atlantic, the Euro faces its own set of challenges. The European Central Bank (ECB) left rates unchanged on Thursday, with policymakers striking a cautious tone amid stagnant growth and softening inflation.
At the same time, the security environment in Eastern Europe has deteriorated after around 19 Russian drones entered Polish airspace earlier in the week, while on Friday, Moscow and Minsk launched the large-scale Zapad-2025 joint military exercises. In response, Poland closed border crossings with Belarus and deployed roughly 40,000 additional troops to its eastern frontier.
