FX.co ★ Euro Holds Firm on ECB Hawkishness

The euro maintained a position just above $1.165, remaining close to its highest point since mid-October. This steadiness comes as traders consider hawkish remarks from ECB Executive Board member Isabel Schnabel and anticipate the Federal Reserve's expected rate cut later in the week. Schnabel expressed confidence in market expectations that an ECB rate hike could be the next policy adjustment, highlighting an upward shift in risks to both economic growth and inflation. She also indicated that December's updated economic forecasts might be revised upward. These comments, coupled with strong economic activity and inflation nearing target levels, have bolstered predictions that the ECB could hold interest rates steady through 2026. Meanwhile, in the United States, market predictions suggest approximately a 90% probability of the Fed reducing rates by 25 basis points on Wednesday. Investors are also anticipating two to three additional rate cuts next year, as recent data signals a cooling labor market.