Euro Gets a U‑Turn: Back to Gains After a Streak of Losses
Short recap: The Euro surprised traders by rallying 0.25 % against the Dollar on Thursday, snapping a four‑day losing run. Even though it’s climbing, the single currency is still hovering near its lowest point in more than a year.
Why the Euro’s mood swings matter
The movement comes on the eve of the European Central Bank’s (ECB) interest‑rate announcement. Market folks are watching the minutes and a speech by Governor Christine Lagarde. Lots of speculation that the ECB will cut rates again – and a third time in a row – could spell a quick re‑slide in the euro’s value.
Key economic pressures piling up
- Weak growth – The latest Sentix investor‑sentiment gauge showed a sharper decline in November than expected, especially over Germany’s economy.
- Political drama – German Chancellor Olaf Scholz has called for a confidence vote, which most think will fail. The fallout could trigger early elections and add to uncertainty.
- US strength – Better‑than‑expected US jobs and consumer‑price data, along with a sluggish inflation climb, could push the euro further down.
Meanwhile, the probability of a 25‑basis‑point rate cut in January for the US is still below 20 %. Policymakers at the Federal Reserve remain cautious, tightening the hope for rate cuts.
Yield gap widening the pain
In the US, the 10‑year Treasury’s yield is chasing its German counterpart, with the spread climbing for the past three sessions. It’s now near the highest level since last April – roughly 2.145 % on Thursday. A widening spread puts extra pressure on the euro.
What this means for you
If you’re holding euros or planning to travel, the market is likely to keep reversing—watch for the next ECB move and stay tuned to US economic data. It’s a roller coaster that can tickle your wallet interest rates, but having a diversified portfolio tends to smooth out the ride.
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