Euro rises above $1.170 to 14-week high on data

The euro strengthened above $1.170, reaching its highest level since May, boosted by improving European economic data and a weaker US dollar.

Eurozone business activity continued to expand in August, with manufacturing showing a marked improvement, particularly in Germany, while services growth remained modest.

The currency also benefited from a softer dollar following the US Treasury’s decision to increase its bond buyback programme, which pushed long-term Treasury yields lower and weighed on the greenback.

Meanwhile, Eurozone consumers slightly lowered their inflation expectations, with anticipated price growth over the next year falling to 2.9% from 3% in June.

However, inflation remains well above the ECB’s 2% target, keeping expectations of further monetary tightening alive following June’s rate increase.

Investors are also assessing recent volatility in global bond markets, where concerns over persistent inflation and high government spending have pushed yields higher.