The euro is on track for its worst monthly performance in over a year, falling roughly 3% in November to $1.0575, driven by concerns over US tariffs and sluggish economic growth in the Eurozone.
Euro heads for worst month in one year
Political instability in Germany and France, along with market expectations of aggressive ECB rate cuts, has made the euro the weakest-performing currency among the G10. Although hawkish comments from the ECB and Trump’s focus on other trade partners provided some temporary relief, worries about stagnating business activity and low inflation in Germany persist.
Inflation accelerates
Even with Euro Area inflation rising to 2.3% in November, core inflation remained steady at 2.7%, fueling expectations of further ECB rate cuts. The ECB remains divided, with doves advocating for swift reductions to neutral levels, while hawks caution about the risks posed by persistent inflation and geopolitical uncertainties. Investors are increasingly betting on a weaker euro, with parity against the dollar now seen as a growing possibility.
