The euro extended its slide, breaking below the $1.115 mark and nearing the multi-month lows last seen in October, as the US dollar remained supported by expectations of further Federal Reserve tightening in December. The recent pullback in oil prices also appeared to stall, with Brent crude stabilizing in the wake of shipping attacks in the Strait of Hormuz. At the same time, investors continued to digest stronger-than-expected US inflation data, which bolstered expectations of another Fed rate hike in December and increased the likelihood of a 50-basis-point move.
In Europe, persistent political and fiscal strains in France, coupled with uncertainty over a potential early departure of ECB President Christine Lagarde, continued to weigh on market sentiment. On the monetary policy front, ECB Chief Economist Philip Lane signaled that another rate increase in December could be warranted, adding to the growing number of policymakers backing a third hike this year.
