FX.co ★ Euro Holds Near Two-Month High

The euro maintained a position just above $1.17 during a week shortened by holidays, remaining near its strongest point since late September. This stability reflects the diverging policy outlooks between the European Central Bank (ECB) and the Federal Reserve. Recently, the ECB opted to keep interest rates steady for the fourth consecutive meeting, indicating that rates are likely to remain unchanged for an extended period. The Eurozone has proven more resilient to U.S. tariffs than anticipated, with recent economic data exceeding expectations, prompting the ECB to revise its growth forecast upward for the second time since September. The ECB now projects the Eurozone's growth at 1.4% for 2025, up from a previous estimate of 1.2%. Additionally, headline inflation is anticipated to hover around the 2% mark through to 2028. In contrast, weaker-than-expected inflation figures in the U.S. have intensified speculation that the Federal Reserve might consider reducing rates next year, offering additional support to the euro.