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Euro at Risk Despite Rising CPI as Markets Envision ECB Rate Cuts
The euro enjoyed its best two months in a year in November and December of 2023, rising 4.4% against the U.S. dollar. A broadly weaker greenback seemed to contribute most of the impetus for the move. The currency slumped as markets priced in a swift interest rate cut cycle from the Federal Reserve, eroding its yield advantage. The European Central Bank (ECB) contributed a bit of the heavy lifting. While the Fed embraced the markets’ dovish repositioning at its December conclave, ECB President Christine Lagarde and the central bank’s Governing Council pushed back on similar speculation. Euro sent higher as the ECB ... (full story)