The euro experienced gains, surpassing the $1.165 mark to reach its highest level since mid-October. This upward movement is attributed to positive economic data from the Eurozone and differing monetary policy outlooks between the European Central Bank (ECB) and the Federal Reserve (Fed).
- The euro climbed above $1.165, its strongest level since mid-October.
- November’s Eurozone composite PMI was revised upward to 52.8, exceeding the preliminary estimate of 52.4.
- The composite PMI indicates the strongest expansion in private-sector activity since May 2023, driven by the services sector.
- Eurozone inflation edged up to 2.2% in November, slightly above market forecasts.
- The ECB is likely to hold interest rates steady through 2026.
- The Federal Reserve is expected to cut rates by 25 basis points this month, with two further reductions projected for next year.
The combined effect of resilient Eurozone economic performance, inflation figures aligning with targets, and a contrasting monetary policy trajectory compared to the US, supports a bullish outlook for the euro. The anticipation of the ECB maintaining stable interest rates coupled with expected rate cuts by the Federal Reserve creates conditions that favor the euro’s strength against the dollar.