Euro Breaches $1.15 for First Time in Six Weeks as Dollar Sinks on Yen Intervention Bets

Euro Surges Past $1.15, Dollar Under Broad Pressure

The euro jumped above 1.15 US dollars for the first time in six weeks on Thursday, reaching 1.1532, as a wave of risk appetite swept through global markets. Strong earnings from Microsoft triggered a bounce on the Nasdaq, lifting demand for the single currency. The European Central Bank set its daily reference rate at 1.1476 dollars, up from 1.1380 on Wednesday.

The dollar’s retreat was broad-based. A fresh batch of US data showed second-quarter growth missed forecasts, weighed down by lower government spending and higher imports. Meanwhile, dollar selling intensified on growing market chatter that the Bank of Japan had quietly intervened in currency markets to halt the yen’s prolonged slide. Japan’s finance minister Satsuki Katayama had recently warned of “decisive” steps if needed.

On the other side of the equation, the eurozone economy expanded more than expected in spring. Analysts pointed to resilient consumer spending despite rising prices linked to the Iran conflict, and to foreign trade that is weathering higher US tariffs and softer Chinese demand. However, Commerzbank economist Vincent Stamer cautioned it is too early to call a genuine turnaround in exports.

How Risk-On, BoJ Speculation and a Growth Divergence Fueled the Moves

Dollar’s Double Blow: Soft Data and Yen Speculation

The US growth miss gave traders a fundamental reason to sell the dollar. More intriguingly, the suggestion that the Bank of Japan may have stepped into markets to support the yen undermined the greenback across the board—not just against the yen. Any official intervention would tighten yen liquidity and ripple through major currency pairs, adding to selling pressure on the dollar.

The AI Import Paradox Softening the US GDP Hit

Thomas Gitzel, chief economist at VP Bank, offered a contrarian take on the US GDP letdown. He argued the shortfall partly reflects imports of equipment needed for building AI data centers, which counts as a drag in GDP arithmetic but signals robust investment. “From this vantage point, growth is by no means disappointing,” he noted. If correct, the dollar could find its footing once markets separate statistical noise from underlying momentum.

Euro Resilience Despite Tariffs and War

The eurozone growth beat was driven by consumers brushing off war-driven inflation and by exports holding up against US tariffs and a slowdown in China. Still, the same data highlights a fragile equilibrium: if the Iran conflict escalates further, cost pressures could crack consumer confidence, and any trade policy shock from Washington would test the bloc’s export engine hard. For now, the growth divergence favors a stronger euro in the near term.

What the Currency Shift Means for Traders and Corporates

• Currency exposure check: Eurozone exporters to the US now face a less favorable exchange rate—the higher EUR/USD can trim margins unless hedges are in place. Revisit hedging ratios for the coming quarter.
• US firms exporting to Europe get a tailwind; selling into the eurozone becomes more dollar-profitable. Sales forecasts may justify upward revisions if the euro stays elevated.
• Watch for actual BoJ confirmation. If Tokyo confirms intervention, expect another leg lower in USD/JPY and broader dollar weakness. That could push EUR/USD toward the 1.16–1.17 range.
• Fed repricing risk. The US GDP miss, combined with the AI-imports argument, may still prompt the Fed to sound slightly more dovish. Pay attention to the next FOMC minutes for any shift in tone on growth.
• Geopolitical wild card: The Iran conflict-driven price rises cited by Commerzbank could yet dampen eurozone demand; monitor the August ECB meeting for any concern about inflation persistence.