The euro extended its decline to $1.14 - the lowest level since mid-June - under pressure from a stronger dollar, as traders reacted to the Fed’s latest policy decision. The Fed kept the federal funds rate unchanged as expected but Chair Powell noted that no decisions had been made regarding September, and his hawkish tone dampened expectations for a rate cut at the next meeting. Meanwhile, fresh figures showed the Eurozone economy grew a modest 0.1% in Q2, slowing sharply from 0.6% in Q1 but still exceeding expectations of no growth. However, the data revealed asymmetries, with GDP in Germany and Italy contracting by 0.1%, while France and Spain recorded expansions. In addition, investors remain concerned that the recently announced US-EU trade agreement disproportionately benefits the US. Expectations for ECB rate cuts have also been pushed further out. Markets now assign a 90% probability of a 25bps cut by March 2026, while the likelihood of a move in December has fallen to 30%.