The euro traded around $1.05, close to two-year lows of $1.04 reached in late November, as traders assessed the economic, political, and monetary outlook for the Eurozone.
Euro rebounds around 1.05 after macro data
Flash PMIs indicated a slower contraction in private sector activity, driven by a rebound in services, while manufacturing remained weak. However, the bloc's largest economies, Germany and France, continued to underperform. Political uncertainty also weighed on the euro, with German Chancellor losing a confidence vote in Parliament as expected, paving the way for snap elections early next year. In France, the new government faces challenges in passing the 2025 budget.
Now eyes on Fed
On the monetary front, the Fed is widely expected to cut rates by 25bps this week, with a slower pace of reductions anticipated for 2025. The ECB implemented its fourth 25bps rate cut last week, maintaining a cautious approach to further easing, though many analysts believe the ECB may need to speed up policy loosening to support the fragile Eurozone economy.
