The euro rose in European trade against a basket of major rivals, expanding gains for the fourth straight session against the dollar and hitting a four-month high, and surpassing the $1.08 barrier for the first time since November.
The just-announced massive German spending plan accelerated inflation forecasts once more, which might prompt the European Central Bank to tighten its policies once more to control such risks.
Now global markets await the policy decisions following the ECB’s policy meeting later today, expected to announce the fifth interest rate cut in a row.
The Price
The EUR/USD rose 0.3% to $1.0820, the highest since November 7, with a session-low at $1.0784.
The pair closed up 1.5% on Wednesday, the third profit in a row, and the largest since November 2023.
Massive German Spending Plan
Germany’s coalition parties agreed to form an infrastructure fund with a budget of 500 billion euros, while changing borrowing rules to bolster military spending and economic growth.
Such massive plans only serve to underpin the euro as the debt limiters are lifted and growth accelerated.
ECB
The European Central Bank is wrapping up its monetary policy meeting today to decide on rates, with most analysts expecting a 25 basis points cut to 2.65%.
Now markets await more clues on the future path of monetary policies by the ECB this year.
Interest Rate Gap
The current eurozone-US interest rate gap stands at 160 basis points in favor of the US, and will likely expand to 185 basis points today, undermining the euro.
