FX.co ★ Euro Holds Firm Ahead of Key Inflation Data

The euro stabilized just below the $1.16 threshold, maintaining its position near its strongest level since mid-November. Investors are gearing up for an eventful end to the month, highlighted by key inflation data releases from Europe’s major economies on Friday. It is widely anticipated that the European Central Bank will maintain interest rates unchanged through 2026, bolstered by a robust economic environment and inflation moving towards its target. Despite ECB officials expressing confidence that the Bank is "in a good position," they acknowledged ongoing price pressures, particularly in the groceries and services sectors, with Joachim Nagel emphasizing the importance of remaining vigilant. Meanwhile, on the other side of the Atlantic, weaker-than-expected US economic data coupled with dovish statements from several Federal Reserve officials have heightened expectations for a third rate cut by the Fed this December, highlighting the growing policy divergence between the ECB and the Fed.