Skip to content EURUSD Rose Amid ECB Expected to Slow Rate Cuts
The EUR/USD currency pair climbed to $1.087, its highest value in two weeks. This uptick followed higher-than-expected inflation numbers in the Euro Area. As a result, investors anticipate that the European Central Bank (ECB) will stick to gradual interest rate cuts instead of making significant reductions.
In October, the annual inflation rate in the Eurozone rose to 2%, up from 1.7% earlier in 2021 and exceeding the forecasted 1.9%. Additionally, the core inflation rate remained steady at 2.7% despite expectations of dropping to 2.6%.
Eurozone Economy Surges with 0.4% Growth in Third Quarter
Earlier this week, stronger economic growth further supported these outlooks. The Eurozone’s economy expanded by 0.4% in the third quarter compared to the previous quarter. This growth rate was double that of the second quarter and surpassed predictions of 0.2%. Germany managed to avoid a recession with a 0.2% growth rate. France and Spain also reported better-than-expected growth, while Italy’s economy showed no growth.
- Also read: Yen Surges as BOJ Hints at Rate Hike
Now, markets have fully priced in a 25 basis point cut in the ECB’s deposit rate for December. This upcoming reduction would be the fourth, following the October, September, and June cuts. However, during the entire month of October, the Euro lost 2.4% in value.
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