The euro approached $1.09, hovering near November highs, as traders awaited more updates on Germany’s fiscal stimulus plan. A key vote on this crucial spending plan is scheduled for this week, with the proposed reform—exempting defense spending from debt limits and introducing a €500 billion infrastructure investment plan—expected to pass in both Germany's lower and upper houses of parliament.
Euro hovers near November highs
This reform follows a deal brokered by the election-winning conservative CDU/CSU bloc with the SPD and the Greens. The approval of this plan is seen as a significant step toward strengthening Germany’s fiscal position and boosting economic growth.
Meanwhile, investors are keeping a close eye on developments in the ongoing trade war, particularly between the US and China, as well as the broader geopolitical situation in Ukraine. These factors continue to create uncertainty, influencing global markets and investor sentiment.
Traders revised their expectations for ECB rate cuts this year
On the monetary policy front, traders have revised their expectations for ECB rate cuts this year, now pricing in only two further reductions, likely to occur in April and June. Additionally, markets no longer anticipate interest rates falling below 2%, indicating a shift in outlook for European monetary policy amid persistent inflationary pressures and economic challenges.
