FX.co ★ Euro Holds Near Mid-October Highs

The euro remained steady around $1.165, approaching its highest value since mid-October. This stability is driven by differing expectations between the European Central Bank and the Federal Reserve. With strong economic activity and inflation trends close to the target, it is anticipated that the European Central Bank will maintain its interest rates unchanged through 2026. The November HCOB Eurozone PMI survey indicated the most rapid expansion in private-sector activity since May 2023, propelled by renewed vigor in the services sector. Additionally, Eurozone inflation increased to 2.2% from October's 2.1%, slightly surpassing both market forecasts and the ECB’s target of 2%. On the other hand, market predictions reflect about a 90% likelihood that the Federal Reserve will execute a 25-basis-point cut this Wednesday, with expectations of two to three additional reductions next year as U.S. data continues to point towards a labor market slowdown.