Euro rises against the dollar on expectations of U.S. interest rate cuts

The euro rose against the dollar on Wednesday, hitting its highest level in six months,
after the U.S. Federal Reserve signaled it could cut interest rates in 2024.

Topic

Hopes for U.S. rate cuts lift euro to six-month high

Seasonal gains boost euro

Hopes for U.S. rate cuts lift euro to six-month high

The euro jumped 0.3% to $1.107, its highest level since July 2023.
The euro has risen 3.4% this year,
with most of the gains coming in recent weeks after the Fed hinted it may halt rate hikes sooner than expected.

“Yields are lower, stocks are higher, and risk appetite is still there,
and markets are looking for the Fed to ease by spring,” said Kit Juckes,
chief foreign exchange strategist at Societe Generale in London.

Seasonal gains boost euro

Other European currencies also rose against the dollar,
with the Swiss franc up 0.2% to $0.992 and the pound up 0.2% to $1.224.

The dollar fell against most other currencies, with the dollar index,
which measures the value of the dollar against a basket of six major currencies, down 0.4% to 101.02.

“The holiday-related gains will fade a bit as we head into the first quarter,”
said Helen Given, a foreign exchange trader at Monex USA.
“The euro looks to be in overbought territory, and with the German economy teetering on the brink,
the risk of a regional recession seems a bit higher than it does here in the U.S.”

As for the dollar, there is also a strong seasonal tendency for it to weaken at the end of the year,
which is partly due to corporate activity.

Euro rises against the dollar on expectations of U.S. interest rate cuts