The euro experienced a decline towards $1.15, hitting a three-month low as investors assessed recent policy decisions and future interest rate prospects. Despite signs of stabilization in Eurozone manufacturing and encouraging economic data releases, the currency struggled to gain traction against a strengthening US dollar.
- The euro declined towards $1.15, reaching a three-month low.
- Eurozone manufacturing activity stabilized in October but provided little support.
- The European Central Bank left interest rates unchanged and maintained a relatively optimistic growth outlook and inflation projection.
- Eurozone inflation eased to just above the ECB’s 2% target.
- Third-quarter GDP growth exceeded expectations.
- October business surveys suggested improving sentiment.
- The US dollar strengthened as traders scaled back expectations for additional Federal Reserve rate cuts.
- Federal Reserve Chair Jerome Powell cautioned that further easing in December is “not a foregone conclusion.”
The currency’s weakness appears to stem from a combination of factors. While the Eurozone demonstrates pockets of economic strength, particularly in GDP growth and business sentiment, the ECB’s cautious approach to interest rate adjustments and the strengthening US dollar due to revised expectations regarding Federal Reserve policy are creating headwinds for the asset. The interplay of these elements suggests continued volatility and downward pressure for the near future.