Euro backs off three-month ahead of European inflation data

Economies.com
2023-11-30 08:23AM UTC

Euro fell in European trade on Thursday against a basket of major rivals, extending losses for another session against the dollar off three-month highs on active profit-taking, and ahead of major European inflation data for November.

 

The common currency is heading for the largest monthly profit in 2023 as concerns about the widening US-European interest rate gap recede, with recent remarks from ECB officials ruling out early interest rate cuts. 

 

EUR/USD

 

EUR/USD fell 0.3% to 1.0940, with a session-high at 1.0984, after losing 0.2% yesterday, the first loss in five days away from a three-month high at 1.1017. 

 

Euro declined on Wednesday after recent data showed consumer prices slowed down more than expected in Germany and Spain, and following strong US growth data in the third quarter. 

 

Inflation Data

 

Now investors await major inflation data for Europe later today, which would hint at the likely path ahead for European policies. 

 

Euro zone consumer prices are expected up 2.7% in November, slowing down from 2.9% in October, while core prices are expected up 3.9%. 

 

Investors expect the ECB to wrap up the current cycle of policy tightening, with speculations now circulating about the date of the first interest rate cut in 2024. 

 

Monthly Trading 

 

EUR/USD is up 3.5% so far this month, on track for the largest monthly profit in 2023. 

 

The current US-European interest rate gap stands at 100 basis points, the lowest since May 2022, and could diminish even more amid expectations of a potential Federal Reserve interest rate cut in March 2023. 

 

Conversely, several European Central Bank officials ruled out an earlier interest rate cut in 2024 as policymakers aim at maintaining tight monetary conditions for most of 2024. 

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