The euro maintained its position above $1.155, nearing levels not seen since late October. This stability is fueled by optimism regarding the potential resolution of the US government shutdown and anticipation surrounding upcoming policy statements from both the ECB and Fed officials. The ECB is expected to maintain its current interest rate policy due to a stable economy and inflation levels near targeted figures. Conversely, weak US economic data has increased expectations of a potential rate cut by the Federal Reserve in December.
- The euro is holding above $1.155, close to its strongest level since late October.
- Investors are hopeful the US government shutdown may soon end.
- Investors are awaiting remarks from ECB and Fed officials for further policy guidance.
- The ECB is widely expected to keep interest rates steady.
- Money markets currently assign only a 40% probability of a rate cut by the ECB by September 2026.
- ECB Vice President Luis de Guindos stated that policy rates are currently appropriate and stressed the need for the ECB to remain “very prudent and cautious.”
- Weak US domestic data has reignited expectations of a December Federal Reserve rate cut.
The Euro’s strength suggests a degree of confidence in the Eurozone economy and the ECB’s monetary policy. The contrast with the US economic data, and the possibility of a Federal Reserve rate cut, could further support the euro relative to the dollar. This all suggests a period of relative stability or potential appreciation for the euro.