The euro-dollar currency pair extended losses for the fourth consecutive day on Friday, with EURUSD trading at 1.1715, and on track to close the week slightly lower after having rallied nearly 2% over the previous three weeks.
The euro extended losses on Thursday after the European Central Bank left interest rates unchanged at 2%, as widely expected, and ECB President Christine Lagarde refused to commit to any particular rate path.
Lagarde affirmed that the decision was taken unanimously and there was no discussion to change interest rates, suggesting that market speculation about a rate hike is unfounded.
The ECB also revised up its economic growth outlook to 1.4% in 2025 and 1.2% in 2026.
In the US, November’s Consumer Price Index (CPI) revealed an unexpected decline in inflation, with the year-on-year rate easing to 2.7% from 3.0% in September, as October’s reading was cancelled due to the government shutdown.
The market has taken these figures with caution, and rightly so, as the Commerce Department affirmed that it only collected data from the second half of the month, with the Black Friday sales already in progress.
The German GfK Confidence Survey, released on Friday, showed further deterioration, with January’s reading dropping to -26.9 from -23.4 in the previous month, and undershooting market expectations of a -23.2 reading.
German Producer Prices Index, also released on Friday, revealed that factory inflation stalled in November, down from a 0.1% rise in October, and contracted at a 2.3% pace in the last 12 months, below the 1.8% decline seen in October and also below the 2.2% contraction forecast by the market consensus.
Meanwhile, French PM Lecornu confirmed that parliament will miss year-end budget approval, forcing a special rollover law. Despite this fiscal setback, the ECB’s hold on rates at 2.00% and upward revisions to growth and 2026 inflation underpin the euro, with rising wage pressures adding to the currency’s support, according to BBH FX analysts.
“France’s failure to repair public finances can lead to further bouts of fiscal stress and is a headwind for EUR,” the analysts added.
“Otherwise, ECB/Fed policy stance continues to underpin the uptrend in EUR/USD. As was widely expected, the ECB left the policy rate unchanged at 2.00% for a fourth consecutive meeting.”
“The ECB’s updated macroeconomic projections reinforce the case that the bank is in a good place to keep rates on hold for some time and that the next move is a hike. Eurozone economic growth is expected to be stronger than in the September projections and inflation has been revised up for 2026 due to stickier services inflation. Indeed, the ECB’s Q3 negotiated wage tracker released today points to rising wage pressures,” the BBH FX analysts concluded.
EURUSD charts by TradingView
(Source: OANDA)
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