The euro rose slightly in the European market on Friday against a basket of global currencies, maintaining its gains for the second consecutive day against the US dollar, on its way to achieving a new weekly gain, supported by the European Central Bank meeting, which turned out to be more hawkish than markets had expected.
In line with expectations, the ECB kept interest rates unchanged for the second consecutive meeting. Sources confirmed that European monetary policymakers believe there is no need for further rate cuts to achieve the medium-term inflation target.
Price Overview
• Today’s euro exchange rate: The euro rose against the dollar by less than 0.1% to 1.1741$, from the opening price of 1.1734$, and recorded the lowest level at 1.1721$.
• On Thursday, the euro ended trading up by 0.35% against the dollar, resuming gains that had paused for two days due to correction and profit-taking from the seven-week high at 1.1780$.
Weekly Trading
Over the course of this week’s trading, which officially ends at today’s settlement, the euro is so far up by about 0.25% against the US dollar, on the verge of securing a second consecutive weekly gain.
European Central Bank
In line with expectations, the European Central Bank on Thursday kept its main interest rates unchanged at 2.15%, the lowest level since October 2022, marking the second consecutive meeting without changes.
In its monetary policy statement, the ECB said that inflation is currently approaching the 2% medium-term target, and that the Governing Council’s assessment of inflation expectations has remained broadly unchanged.
The ECB also noted that any minor deviation from the inflation target, if temporary and short-lived, would not necessarily justify an immediate policy move.
Christine Lagarde
ECB President Christine Lagarde said on Thursday that the bank remains in a “good position” and noted that risks to the economy have become more balanced than before.
European Interest Rates
• Sources: Policymakers at the European Central Bank believe that no further rate cuts are needed to achieve 2% inflation, despite new economic forecasts pointing to lower rates over the next two years.
• Sources: Unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.
• Money market pricing for an ECB rate cut of 25 basis points in October fell from 30% to below 10%.
• Traders have trimmed bets on ECB monetary easing, pointing to the end of this year’s rate-cutting cycle.
• Money markets now estimate a 50% probability of a 25-basis-point ECB rate cut by June 2026, compared with nearly 60% before the ECB’s statement.
