Dollar stabilizes, Euro declines with increasing bets on interest ‎rate cut

Euro fell to its lowest level in more than 3 weeks on Thursday as traders increased bets that the European Central Bank will begin cutting interest rates starting in March 2024, while the dollar stabilized before the release of important jobs data this week.

According to Reuters, the euro fell 0.07% to $1.0757, reaching its lowest level since November 14. It fell 1 percent this week and is on track to record the largest weekly decline since May

Traders are betting that there is an approximately 85% chance that the European Central Bank will reduce interest rates at the March meeting, bringing the reduction to approximately 150 basis points by the end of next year.

François Villeroy de Gallo, a member of the European Central Bank and head of the French Central Bank, told a French newspaper in an interview published yesterday, Wednesday, that the issue of lowering interest rates may arise in 2024.

“The decline in inflation is happening faster than we thought,” he added

The European Central Bank will set interest rates next Thursday and is certain to keep them at the current four percent, although the focus will be on the statements of those responsible for forecasting interest rates.

The dollar recovered this month after falling 3% in November, with traders increasing their bets that other central banks would lower interest rates.

The dollar index, which measures the value of the US currency against 6 competing currencies, rose by 0.038% to 104.17 points, slightly less than the highest level it reached in two weeks at 104.23 points, which it touched yesterday, Wednesday. The index rose 0.9% this week and is on track to achieve its strongest weekly performance since July.