The euro rose in European trading on Thursday against a basket of global currencies, extending gains for a second consecutive session against the US dollar and marking its highest level in two months. The move came amid strong demand for the single currency as one of the most attractive investment opportunities in the foreign-exchange market, especially after the interest-rate gap between Europe and the United States narrowed further.
The US dollar deepened losses after the Federal Reserve’s meeting delivered a tone that was less hawkish than markets had anticipated, encouraging investors to increase their bets on two additional rate cuts in 2026.
European Central Bank President Christine Lagarde highlighted the recent improvement in economic activity across the eurozone and hinted that growth forecasts could be revised higher at next week’s policy meeting.
Price overview
• EUR/USD today: the euro rose 0.1% to 1.1707 dollars — its highest since 17 October — from an opening level of 1.1695 dollars, after touching a low of 1.1690 dollars.
• The euro ended Wednesday up 0.6% against the dollar — its first gain in five sessions and the strongest daily rise since 16 September — supported by the outcome of the Federal Reserve meeting.
US dollar
The dollar index fell 0.1% on Thursday, deepening losses for a second straight session and hitting a two-month low of 98.54, reflecting continued weakness in the US currency against a basket of global peers.
The Federal Reserve on Wednesday cut interest rates by 25 basis points at the conclusion of its final meeting of the year, lowering the target range to 3.75% — the lowest since September 2022 — marking a third consecutive rate cut.
However, Fed Chair Jerome Powell’s comments at the press conference were less hawkish than investors expected, surprising markets that had anticipated a more aggressive stance.
The meeting reinforced market expectations for two additional rate cuts next year, compared with the Fed’s median projection of just one 25-basis-point cut.
Nick Rees, head of macro research at Monex Europe, said: “For us, the key takeaway was the tilt toward monetary easing in both the updated policy statement and Chair Powell’s press conference.”
Christine Lagarde
ECB President Christine Lagarde said Wednesday that the eurozone economy has shown notable resilience amid global trade tensions and that growth is now approaching its potential pace — a shift that could prompt the ECB to lift its growth forecasts at next week’s policy meeting.
Speaking at a Financial Times event, Lagarde noted that the ECB raised its projections during the last forecasting round, adding that “we may do so again in December.” She pointed to improving sentiment indicators — particularly in business and manufacturing — as well as labor-market data that continue to show economic strength.
Lagarde reiterated that monetary policy is “in a good place,” which investors interpret as a signal that no rate adjustments are currently needed.
European interest rates
• Market pricing for a 25-basis-point rate cut by the ECB in December remains below 10%.
• Reuters sources indicated that the ECB is likely to keep rates unchanged at the upcoming December meeting.
Interest-rate gap
Following the Fed’s decision, the interest-rate gap between Europe and the United States narrowed to 160 basis points in favor of US rates — the smallest spread since May 2022 — a development that supports further appreciation in the euro against the US dollar.
