Euro Weakens as Dollar Gains on Fed Tightening Expectations
The euro extended its decline, falling below the $1.115 level and approaching its October multi-month lows, as the US dollar remained supported by expectations of further Federal Reserve tightening in December. The recent decline in oil prices also lost momentum, with Brent crude stabilizing following shipping attacks in the Strait of Hormuz. Meanwhile, markets continued to assess hotter-than-expected US inflation data, which reinforced expectations of another Fed rate increase in December and raised the possibility of a 50-basis-point hike. In Europe, persistent political and fiscal challenges in France, alongside uncertainty surrounding the possibility of an early departure by ECB President Christine Lagarde, continued to undermine market sentiment. On the monetary policy front, ECB Chief Economist Philip Lane indicated that another rate increase in December could be justified, adding to the growing number of policymakers signaling support for a third rate hike this year.
The euro extended its decline, falling below the $1.115 level and approaching its October multi-month lows, as the US dollar remained supported by expectations of further Federal Reserve tightening in December. The recent decline in oil prices also lost momentum, with Brent crude stabilizing following shipping attacks in the Strait of Hormuz. Meanwhile, markets continued to assess hotter-than-expected US inflation data, which reinforced expectations of another Fed rate increase in December and raised the possibility of a 50-basis-point hike.
In Europe, persistent political and fiscal challenges in France, alongside uncertainty surrounding the possibility of an early departure by ECB President Christine Lagarde, continued to undermine market sentiment. On the monetary policy front, ECB Chief Economist Philip Lane indicated that another rate increase in December could be justified, adding to the growing number of policymakers signaling support for a third rate hike this year.