On September 2nd, Monday, European Central Bank President Christine Lagarde announced in an interview with French media that the ECB has "achieved price stability," reaching its 2% inflation target: "The inflation target has been achieved through 2%, and we will continue to take necessary measures to ensure inflation remains under control and prices stay stable." This statement comes just ahead of the release of Eurozone August CPI data, with Bloomberg economists also expecting the data to show Eurozone inflation at exactly 2%. From policymakers' statements, the ECB is demonstrating an increasingly confident stance. The ECB's July meeting minutes showed that officials consider inflation risks to be "broadly balanced."

On Monday, acting Governor of Slovenia's central bank Primoz Dolenc stated in an interview that the European Central Bank's "easing cycle has ended, and we can take a brief pause." He noted: "From July until now, there have been no new developments that would change this view. We can maintain interest rates at current levels, as this ensures we achieve our inflation targets in the future."

Additionally, data released Monday by Eurostat showed that the Eurozone unemployment rate fell to 6.2% in July from 6.3% in June, with unemployment declining by 170,000 people. This matches the historic low reached in November 2024. This robust labor market data provides ECB policymakers with additional reasons to maintain their current policy stance. The ECB will hold its monetary policy meeting next week, following July's meeting where the bank paused interest rate hikes for the first time in a year. ECB President Lagarde stated at that time that monetary policy was "in a good position," given that inflation is expected to stabilize at the 2% target level, with investors widely expecting no near-term monetary policy changes.

Beyond the overall unemployment rate reaching the historic low of 6.2%, youth employment conditions have also improved significantly. Data shows that unemployment among those under 25 dropped substantially from 14.3% to 13.9%, indicating that companies remain active in hiring. Looking at recent years of economic fluctuations, the Eurozone unemployment rate has consistently maintained historic low levels, highlighting the structural strength of its labor market.

Key data to watch today includes Australia's Q2 current account, Eurozone August HICP annual rate preliminary data (non-seasonally adjusted), and US August ISM Manufacturing PMI.

**US Dollar Index** The US Dollar Index declined yesterday, hitting a 5-week low, currently trading around 97.70. Beyond continued pressure from rising Fed rate cut expectations, concerns about Fed independence have also weighed on the currency. Additionally, strong Eurozone economic data supporting euro gains has also pressured the dollar index. Today, watch for resistance near 98.20, with support around 97.20.

**EUR/USD** The euro rose yesterday with modest daily gains, currently trading around 1.1710. The primary driver supporting euro gains has been the continued decline in the US Dollar Index, which hit 5-week lows amid rising Fed rate cut expectations and concerns about Fed independence. Additionally, strong Eurozone economic data has provided some support for the currency pair. Today, watch for resistance near 1.1800, with support around 1.1600.

**GBP/USD** The pound rose yesterday, reaching a 2-week high, currently trading around 1.3540. Beyond short covering providing some support, the main driver of sterling's rise has been the US Dollar Index hitting 5-week lows under pressure from rising Fed rate cut expectations and other negative factors. However, weak UK economic data and Bank of England rate cut expectations have limited the currency's rebound potential. Today, watch for resistance near 1.3650, with support around 1.3450.