Euro pulls away from 3-month peak ahead of key inflation data in Europe By FXNEWSTODAY

FXNEWSTODAY – The euro fell in the European market on Thursday against a basket of global currencies, continuing its losses for the second day in a row against the US dollar, moving away from the highest level in three months, with continued corrections and profit-taking, and before the release of key data in Europe for the month of November.

The single currency is on track to achieve its largest monthly gain in 2023, in light of the fading of fears of a widening interest rate gap between Europe and the United States, especially after comments by European Central Bank officials reduced the possibilities of early cuts in European interest rates.

Euro exchange rate today

It fell approximately 0.3% to $1.0940, from the opening trading price of $1.0969, and recorded the highest level today at $1.0984.

Yesterday, the euro lost 0.2% against the dollar, the first loss in the last five days, after recording earlier in trading the highest level in three months at $1.1017.

In addition to selling to take profits, the euro fell on Wednesday after data showed a slowdown exceeding expectations in inflation rates in Germany and Spain, and after the release of strong data on the growth of the United States economy during the third quarter of this year.

Key inflation data

Later today, investors are awaiting the release of key inflation data throughout Europe during November, which will clarify the extent to which inflationary pressures have affected monetary policy makers at the European Central Bank.

The annual consumer price index in Europe will be released at 10:00 GMT, where expectations indicate a rise of 2.7% in November, from a rise of 2.9% in October, and in basic terms an increase of 3.9% is expected from a rise. By 4.2%.

If the data comes in line with market expectations or below, it means that inflationary pressures on monetary policy makers at the European Central Bank continue to ease at a faster pace than expected.

This greatly reduces the possibility of the end of the current European interest rate hike cycle, and enhances the possibility of early cuts in interest rates, which will put negative pressure on the price of the euro in the foreign exchange market.

Monthly transactions

In terms of November transactions, which officially end when prices are settled today, the single European currency “Euro” is up until now by 3.5% against the American currency “Dollar” and is on track to achieve the largest monthly gain in 2023, specifically since November 2022. .

The interest rate gap between Europe and the United States is currently at 100 basis points, the smallest gap since May 2022. It is expected to shrink below that starting in March 2024, the likely timing of the first cut in US interest rates.

For their part, most European Central Bank officials ruled out making early cuts in European interest rates during the next year, and indicated maintaining the current interest rate for as long as possible during 2024.

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