The euro rose above $1.051, moving further away from its two-year low of $1.046 on November 21, after ECB official Isabel Schnabel warned against excessive rate cuts.
Euro climbs against dollar
She cautioned that borrowing costs are approaching neutral levels, and over-easing could deplete policy options, leading markets to lower their expectations for ECB rate reductions through 2025. The debate surrounding the ECB's strategy intensifies as inflation nears the 2% target amid ongoing economic challenges in the Eurozone.
Global uncertainty is increasing
Meanwhile, global uncertainty is increasing with President-elect Donald Trump's protectionist trade agenda, which includes proposed tariffs of 10% on Chinese goods and 25% on imports from Mexico and Canada. In France, bond risks surged to levels not seen since the Eurozone debt crisis, driven by concerns that Prime Minister Michel Barnier may struggle to pass next year’s budget, adding to fears of political instability in the region.
