Euro holds above $1.17 as ECB holds course

The euro traded just above $1.17, staying close to last month’s four-year high of $1.192, as markets weighed the widening policy gap between the European Central Bank and the Federal Reserve.

Eurostat data confirmed Eurozone inflation quickened to 2.2% in September, up from 2.0% in August and slightly above the ECB’s mid-point target.

Vice President Luis de Guindos reiterated that current rates remain “adequate” and decisions will be taken “meeting by meeting,” signaling little appetite for imminent easing.

In contrast, the US dollar weakened as the Fed is expected to deliver back-to-back 25 bps cuts in its final two meetings of the year.

Sentiment worsened after ADP data revealed an unexpected decline in private-sector employment, adding to concerns over the health of the labor market.

Investors are also bracing for potential fallout from what would be the first US government shutdown in seven years.