"EURUSD surged strongly in yesterday's trading session and is currently holding around the 1.1700 region as the market continues to adjust expectations regarding monetary policy from both the U.S. and the eurozone. The current upward trend reflects a combination of a weakening USD following the Fed's rate cut and the relative stability of the Euro as ECB policy shows little volatility."
"In the latest meeting early on December 11, the Fed cut interest rates by another 25 basis points, shifting policy toward easing while still maintaining a cautious stance regarding upcoming rate decisions. Specifically, the Fed signalled that it may pause in the upcoming meetings to further assess the sustainability of inflation and labour market conditions. The new dot-plot indicates that there may be one more rate cut in 2026, instead of the prolonged easing cycle that the market previously expected."
"On the ECB side, monetary policy is showing significantly more stability compared to the Fed. The latest surveys from Reuters show that most experts expect the ECB to keep interest rates at 2% at least until the end of 2026. This reflects a backdrop in which eurozone inflation has approached the target, while growth has begun to stabilize again after a prolonged period of decline."
EURUSD surged to around 1.1700 as markets adjust to divergent monetary policy signals from the U.S. and the eurozone. The USD weakened after the Fed cut rates by 25 basis points on December 11 and signalled a possible pause to reassess inflation and labour market sustainability. The Fed's dot-plot now implies one more cut in 2026 and the FOMC showed internal division with three dissenting votes. In contrast, ECB policy appears stable, with surveys expecting rates at 2% through 2026 and Lagarde noting a stronger outlook. A stronger euro could hurt exports and risk lowering inflation below target.
Read at London Business News | Londonlovesbusiness.com
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