The euro continued its recent downward trend on Friday. In New York trading, however, the common currency appeared somewhat stabilized at 1.0872 US dollars – before that it had fallen to 1.0829 dollars. The European Central Bank had set the reference rate at 1.0875 (Thursday: 1.0931) dollars and the dollar therefore cost 0.9195 (0.9148) euros.
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Since reaching its highest level since August on Wednesday, the euro has come under increasing pressure. The expectation that the ECB could reduce its key interest rates as early as spring 2024 is putting a strain on the common currency. Currently there is a first Interest rate cut priced into the financial markets for next April. Futures contracts indicate interest rate cuts totaling more than one percentage point over the course of the year.
The speculation was supported by inflation data from Thursday, which was significantly weaker than expected. At 2.4 percent, inflation in the euro area is once again within reach of the ECB’s medium-term target. Statements by France’s central bank chief Francois Villeroy de Galhau that inflation in the currency area is falling faster than expected increased pressure on the euro on Friday. However, banking economists remain skeptical about whether the inflation target can soon be achieved sustainably again.
NEW YORK (dpa-AFX)