Euro rises after best weekly performance in 16 years

The euro rose in European trade on Monday against a basket of major rivals, maintaining gains for the second session against the dollar, and about to touch four-month highs after marking the best weekly performance in 16 years. 

Following the European Central Bank’s latest policy meeting, the odds of a rate cut in April declined as traders now await more data and clues.

The Price

The EUR/USD pair rose 0.4% today to $1.0871, with a session-low at $1.0827.

The euro rose 0.45% on Friday against the dollar, marking the fourth profit in five days, and hitting a four-month high at $1.0888 following weak US jobs data.

The euro rose 4.4% last week against the greenback, the best weekly performance since March 2009.

The gains come amid record fiscal spending plans in Germany, which boosted inflation forecasts and might force the European Central Bank to tighten its policies once more to face inflationary pressures.

European Rates

The European Central Bank cut main borrowing rates by 25 basis points to 2.5% as expected, noting in its statement that inflation has slowed down in line with forecasts.

The ECB now expects inflation to hit 2.3% this year, before slowing down to 1.9% in 2026, before rising to 2% in 2027.

The ECB reduced forecasts for eurozone economic growth in 2025 to 0.9%, and in 2026 to 1.2%, and in 2027 to 1.3%. 

ECB President Christine Lagarde said the decision to cut interest rates was in line with economic developments and data in the eurozone.

She noted that inflation started to fall considerably in line with forecasts, and will likely settle at the targets sustainably. 

Reuters reported that the ECB policymakers expect a pause in rate cuts in April before embarking on another round of cuts.

The odds of an ECB rate cut in April is now less than 50%, compared to a 60% chance next week.