The euro rose in the European market on Friday against a basket of global currencies, moving higher near a two-month high versus the US dollar, supported by the weak performance of the American currency, which remains under negative pressure following the Federal Reserve’s latest meeting.

The European Central Bank meets on Wednesday and Thursday this week, concluding its monetary policy meetings for 2025, with markets fully expecting European interest rates to be kept unchanged for the fourth consecutive meeting.

Price Overview

• Euro today: The euro rose 0.1% against the dollar to $1.1745, from an opening level of $1.1735, and recorded a low at $1.1728.

• The euro ended Friday’s trading unchanged against the dollar, after posting gains over two consecutive sessions, during which it reached a two-month high at $1.1763.

• The euro gained 0.85% against the dollar last week, marking its third consecutive weekly advance, supported by the narrowing interest rate gap between Europe and the United States, as well as hopes for a potential peace agreement between Russia and Ukraine.

US Dollar

The US dollar index fell by about 0.1% on Monday, moving closer once again to its lowest levels in two months, reflecting the continued weakness of the American currency against a basket of global currencies.

The US dollar has remained under negative pressure since last week’s Federal Reserve meeting, after the outcome came less hawkish than markets had expected, reviving bets on the continuation of the federal rate-cutting cycle through 2026.

European Central Bank

• The European Central Bank meets on Wednesday and Thursday to assess the appropriate monetary policy in light of recent economic developments across the euro area.

• The bank is widely expected to keep European interest rates unchanged at 2.15%, the lowest level since October 2022, for the fourth meeting in a row.

• Markets are awaiting further signals regarding the likelihood of the European Central Bank resuming its monetary easing cycle and cutting interest rates during 2026.

• ECB President Christine Lagarde praised the recent improvement in economic activity across the euro area last week, and hinted at the possibility of upgrading economic growth forecasts at this week’s meeting.

Interest Rate Gap

Following the Federal Reserve’s decision last week, the interest rate gap between Europe and the United States narrowed to 160 basis points in favor of US rates, the smallest gap since May 2022, which supports further gains in the euro against the US dollar.

The Japanese yen rose in the Asian market on Monday against a basket of major and minor currencies, resuming gains that were temporarily halted on Friday versus the US dollar, supported by the weak performance of the American currency, which is trading near low levels following the Federal Reserve meeting.

The yen began the week in positive territory, supported by increased buying interest ahead of the Bank of Japan meeting on Thursday and Friday, where markets widely expect a 25 basis point interest rate hike, marking the second monetary tightening move this year.

Price Overview

• Japanese yen today: The dollar declined against the yen by 0.4% to ¥155.18, from today’s opening level of ¥155.80, and recorded a high at ¥155.99.

• The yen ended Friday’s trading down 0.15% against the dollar, marking the first daily loss in the past three days, amid consolidation and as the decline in the US currency paused.

US Dollar

The US dollar index fell by about 0.1% on Monday, moving back toward its lowest levels in two months, reflecting the continued weakness of the American currency against a basket of global currencies.

The US dollar has remained under negative pressure since last week’s Federal Reserve meeting, after the outcome came less hawkish than markets had expected, reviving bets on the continuation of the federal rate-cutting cycle through 2026.

Bank of Japan

The Bank of Japan meets on Thursday and Friday this week, amid strong expectations of a 25 basis point interest rate hike to a range of 0.75%, the highest level since 2008 during the global financial crisis.

Markets are closely watching what Governor Kazuo Ueda will say about the direction of monetary policy in 2026, at a time when expectations are rising that the Japanese government may resort to additional fiscal expansion, adding further complexity to the policy outlook for the Bank of Japan.

Japanese Interest Rates

• Following recent inflation and wage data in Japan, pricing for the probability of a quarter-point interest rate hike by the Bank of Japan at the December meeting has stabilized above 90%.

• Bank of Japan Governor Kazuo Ueda has presented more optimistic expectations for the Japanese economy in his latest remarks, stating that the central bank will assess the pros and cons of raising interest rates at its upcoming monetary policy meeting.

• Three government officials told Reuters that the Bank of Japan is likely to raise interest rates in December.

Views and Analysis

Analysts at Société Générale said they expect the Bank of Japan to raise interest rates to 1% by July next year, while also anticipating a rate hike when the bank announces its policy decision on Friday.

The analysts added that once rates reach 1%, the Bank of Japan will enter uncharted territory, making it more likely to adopt a cautious tightening pace through gradual 25 basis point increases, with close monitoring of the impact on economic growth and price levels. They expect at least nine months to a full year between each rate hike.

US stock indices showed mixed performance during Friday’s trading, as investor concerns returned over technology stocks, particularly companies linked to artificial intelligence.

This followed disappointing earnings results from both Oracle and Broadcom, which pointed to a slowdown in generating returns from their massive investments in artificial intelligence, reviving fears about inflated valuations across the sector.

The Federal Reserve had decided on Wednesday to cut its benchmark interest rate by a quarter percentage point, bringing it into a range of 3.5% to 3.75%.

However, the move was accompanied by warning signals regarding the future path of monetary policy and saw three dissenting votes among members of the Federal Open Market Committee, something that has not occurred since September 2019.

In a press conference following the decision, Fed Chair Jerome Powell said inflation remains “somewhat elevated” due to tariffs, expressing hope that upcoming economic data will provide clearer visibility.

In trading, the Dow Jones Industrial Average rose by 0.2%, or 108 points, to 48,816 points by 15:03 GMT, while the broader S&P 500 index fell by 0.3%, or 21 points, to 6,880 points, and the Nasdaq Composite declined by 0.61%, or 137 points, to 23,455 points.

Copper prices on the London Metal Exchange declined during Friday’s trading after approaching a new record level near $12,000 per ton, amid concerns that elevated prices could start to weigh on demand.

Three-month copper futures on the LME fell 0.35% to $11,829 per ton by 13:30 GMT.

The pullback came after prices touched an all-time high of $11,952, while the metal remains on track to post weekly gains for the third consecutive week.

In contrast, the most actively traded copper contract on the Shanghai Futures Exchange closed Friday’s session up 1.95% at 94.08 thousand yuan ($13,335.03) per ton, recording weekly gains of around 1.4% after hitting a new record high of 94.57 thousand yuan.

The Shanghai Futures Exchange also reported that copper inventories in its registered warehouses rose by 0.5% over the past week to 89.389 thousand tons.

During US trading hours, March copper futures were up 0.2% at $5.51 per pound at 14:32 GMT.