According to Odaily, the euro is experiencing renewed weakness following significant declines in October and November, coupled with a two-week period of consolidation. Analysts, including Chris Turner from ING, suggest that the euro may face further depreciation against the US dollar, potentially dropping to 1.0500 or lower in the short term. This forecast comes ahead of key economic announcements, including US inflation data and the European Central Bank's (ECB) policy decision later this week.
The upcoming data release on Wednesday is anticipated to reveal an acceleration in the US core inflation rate for November. Such a development could intensify doubts regarding the appropriateness of the Federal Reserve's approach to interest rate cuts. Meanwhile, the ECB is expected to announce a 25 basis point rate cut on Thursday. This move could pave the way for interest rates to fall below the so-called neutral rate, which neither stimulates nor slows economic growth. The potential rate adjustments by both the Federal Reserve and the ECB are likely to influence the euro's trajectory in the coming days.
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