Euro Hits One-Year Low vs Dollar on Rate Bets, Weak German Data

The euro dropped to its lowest level in a year against the U.S. dollar on Tuesday, pressured by shifting interest-rate expectations and disappointing economic data from Germany.

The single currency fell as market participants adjusted their rate hike bets, with the European Central Bank seen as less aggressive compared to the Federal Reserve. ECB President Christine Lagarde said Monday there wasn't enough evidence of second-round price effects to warrant a more forceful response after raising rates earlier this month. Meanwhile, weak German industrial production and business sentiment data added to concerns about the eurozone's largest economy. For foreign exchange traders, the widening interest-rate differential between the U.S. and the eurozone favors the dollar, as higher U.S. yields attract capital inflows. The euro's decline against the dollar reflects a shift in rate differentials and risk sentiment, with traders pricing in a more hawkish Fed path. NowPrice real-time fx quotes show the EUR/USD pair trading near the 1.05 level, its weakest since mid-2025. Looking ahead, traders will focus on upcoming eurozone inflation data and Fed speeches for further clues on the rate outlook. The key support level for EUR/USD lies around 1.0450, with resistance at 1.0600. A break below 1.05 could open the door to further losses, while any upside surprise in eurozone data may trigger a short-term bounce.