Quarterly Commodities Outlook is available for free now. Download your report →
By: Editorial Team, StoneX Media
Currency markets are increasingly shaped by a widening gap between the world's two most influential central banks. The Federal Reserve has shown no urgency to ease policy, while the European Central Bank is growing more hesitant to tighten further. That divergence, not any single data release, is now the dominant force behind the U.S. dollar's advantage over the euro. With Federal Reserve meeting minutes on the calendar and the European Central Bank's next move in question, the policy gap between them has become the central story for EUR/USD.
Fawad Razaqzada, Market Analyst at FOREX.com, has spent more than 12 years tracking currency markets through the lens of macroeconomics, technical analysis and price action. His coverage sits at the intersection of central bank policy and price behavior, the exact dynamic now driving the split between the Federal Reserve and the European Central Bank.
The Federal Reserve remains the primary anchor for dollar strength, and recent U.S. data has done little to change that. Razaqzada notes that "Last week's disappointing U.S. jobs report wasn't weak enough to significantly change expectations for Federal Reserve policy", a sign that the labor market would need to weaken considerably further before the Federal Reserve shifts course. The latest ISM Services PMI reinforced that picture, showing the U.S. economy still expanding at a healthy pace without stoking fresh inflation concerns. Attention now turns to Wednesday's FOMC minutes, where any hint of continued tightening could extend the dollar's advantage. As Razaqzada puts it, "If they showed any preferences to further tightening, that could provide another boost for the dollar".
"Markets are becoming less convinced that the European Central Bank will raise rates again in September", and that shift in expectations is doing more to shape EUR/USD than any single piece of eurozone data. Germany's industrial production rose 0.9% in May on stronger manufacturing and construction activity, a rare bright spot for the currency bloc. The gain, however, failed to provide any support for the euro. A single positive release is not enough to change the bigger picture, particularly with the European Central Bank still expected to hold a cautious tone on inflation. As Razaqzada explains, "the EUR/USD is being driven mainly by the dollar side of the equation right now".
From detailed guides on how to trade major assets to quarterly market outlooks and special reports, we offer FREE access to the articles you need to successfully implement "global macro" style trading!
Sign Up
--- Written by Gus Farrow, Senior Manager, StoneX Media
--- Expert: Fawad Razaqzada, Market Analyst, FOREX.com
The subsidiaries of StoneX Group Inc. provide financial products and services, including, but not limited to, physical commodities, securities, clearing, global payments, risk management, asset management, foreign exchange, and exchange-traded and over-the-counter derivatives. These financial products and services are offered in accordance with the applicable laws in the jurisdictions in which they are provided and are subject to specific terms, conditions, and restrictions contained in the terms of business applicable to each such offering. Not all products and services are available in all countries. The products and services offered by the StoneX Group of companies involve risk of loss and may not be suitable for all investors. Full Disclaimer. This content is not intended for residents of any particular country, and the information herein is not advice nor a recommendation to trade nor does it constitute an offer or solicitation to buy or sell any financial product or service, by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Please refer to the Regulatory Disclosure section for entity-specific disclosures. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The information herein is provided for informational purposes only. This information is provided on an ‘as-is’ basis and may contain statements and opinions of the StoneX Group of companies as well as excerpts and/or information from public sources and third parties and no warranty, whether express or implied, is given as to its completeness or accuracy. Each company within the StoneX Group of companies (on its own behalf and on behalf of its directors, employees and agents) disclaims any and all liability as well as any third-party claim that may arise from the accuracy and/or completeness of the information detailed herein, as well as the use of or reliance on this information by the recipient, any member of its group or any third party.
© 2026 StoneX Group Inc. all rights reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
Argentina's peso outlook now depends on whether policy can restore positive real interest rates as seasonal dollar inflows fade. Inflation, private sector dollar demand and central bank credibility will decide whether currency stability holds through the second half of 2026.
The Federal Reserve and the European Central Bank are moving further apart on interest rate policy, and that split is now the main force behind the U.S. dollar's edge over the euro. As Fed minutes approach and ECB rate hike bets fade, the gap between the two central banks is becoming the story traders cannot ignore.
The Federal Reserve and the European Central Bank are moving further apart on interest rate policy, and that split is now the main force behind the U.S. dollar's edge over the euro. As Fed minutes approach and ECB rate hike bets fade, the gap between the two central banks is becoming the story traders cannot ignore.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
