Euro Hovers Near 18-Month Low

The euro remained below the $1.11 level, hovering near its weakest point since March 2025, as the US dollar drew support from growing expectations of further Federal Reserve tightening. Persistent political and fiscal uncertainty in France, concerns over the region's weakening growth outlook and speculation surrounding the next ECB president also weighed on the single currency. Stronger-than-expected US consumer price data released on Tuesday reinforced expectations of another Fed rate hike in December, while raising the possibility of a more aggressive 50-basis-point increase. In Europe, analysts expect the European Central Bank to deliver one final deposit rate hike in the current tightening cycle next month. However, more than a third anticipate an additional increase in early 2027, as inflation remains around twice the ECB's 2% target. Markets are even more hawkish, currently pricing in three rate hikes by the end of next year.

EURUSD decreased to 1.11, the lowest since May 2025. Over the past 4 weeks, Euro US Dollar lost 1.17%, and in the last 12 months, it decreased 4.87%.

The euro extended its decline, sliding below the $1.11 level and touching its weakest point since March 2025, as the dollar remained supported by growing expectations of further Federal Reserve tightening in December. Meanwhile, the recent decline in oil prices lost momentum, with Brent crude stabilizing following shipping attacks in the Strait of Hormuz. Markets continued to digest hotter-than-expected US inflation data, which strengthened expectations of another Fed rate increase next month and raised the prospect of a more aggressive 50bp hike. In Europe, persistent political and fiscal uncertainty in France, coupled with concerns over a weakening growth outlook and speculation surrounding the succession to the ECB presidency, further weighed on sentiment. On the policy front, ECB Chief Economist Philip Lane suggested that another rate increase in December could be warranted, adding to the growing number of policymakers expressing support for a third rate hike this year.