The euro rose against the U.S. dollar, supported by growing sentiment that the European Central Bank (ECB) will implement only one more interest rate cut this year. This limited monetary easing is seen as a stabilizing force for the euro, according to ING’s Head of Markets, Chris Turner.
At last week’s ECB meeting, President Christine Lagarde highlighted resilience in the eurozone economy despite broader global uncertainties. Her comments, coupled with the central bank’s indication that rate reductions may be nearing an end, contributed to bullish momentum for the euro.
Money market data from the London Stock Exchange Group (LSEG) show that investors are now pricing in just one additional 25 basis-point rate cut, likely in December. This marks a shift from earlier expectations of more aggressive easing, signaling renewed confidence in the euro area’s economic trajectory.
The euro’s rebound follows a brief dip on Friday, when stronger-than-expected U.S. employment data boosted the dollar. Despite that setback, the euro has since climbed 0.3%, reaching $1.1432. This brings it close to its recent six-week high of $1.1494, as reported by LSEG.
With fewer ECB rate cuts anticipated, forex analysts suggest the euro could maintain upward momentum, especially if U.S. economic indicators continue to challenge expectations. As inflation cools and rate differentials narrow, the euro-dollar exchange rate may remain volatile but tilted in favor of the euro in the near term.
The evolving policy stance of the ECB, paired with shifts in U.S. monetary sentiment, will likely be key drivers of currency market performance in the coming weeks. Traders and investors are now closely watching upcoming economic releases and central bank signals for confirmation of this trend.


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