Euro strengthens toward $1.16

The euro extended its gains toward the $1.16 level, hovering near its strongest point since late October, as investors anticipate a busy week of remarks from European Central Bank and Federal Reserve officials for further guidance on monetary policy.

The ECB is widely expected to maintain interest rates for the foreseeable future, supported by a resilient economy and inflation tracking near target.

Money markets currently assign only a 45% probability of a rate cut by September 2026. Several ECB officials have recently emphasized caution: François Villeroy de Galhau stressed keeping policy options open, Joachim Nagel urged vigilance on inflation, and Vice President Luis de Guindos suggested any dip below the 2% target would likely be temporary.

Meanwhile in the US, weak domestic data, including October job losses, a sharp fall in consumer sentiment to its second-lowest reading on record, and layoffs reaching a 20-year high, reignited expectations of a December Fed rate cut.