FX.co ★ Euro Hits Mid-October High

The euro has ascended beyond $1.165, marking its highest point since mid-October, bolstered by an upward revision of November's Eurozone composite PMI and contrasting expectations regarding monetary policy between the European Central Bank (ECB) and the Federal Reserve (Fed). The HCOB Eurozone Composite PMI increased to 52.8, surpassing the initial estimate of 52.4, representing the most robust growth in private-sector activity since May 2023, largely propelled by renewed vigor in the services sector. Earlier this week, Eurozone inflation rose to 2.2% in November, up from 2.1% in October, slightly exceeding market expectations. This blend of solid economic performance and inflation nearing target levels suggests that the European Central Bank may maintain stable interest rates through 2026. In contrast, the Federal Reserve is anticipated to reduce rates by 25 basis points this month, along with two additional cuts expected next year, thereby furthering the euro's strength against the dollar.