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    EUR/USD rises above 1.1615 during Asian trading as USD declines due to weak PMI data

    by VT Markets
    /
    Dec 2, 2025

    Euro Gains from Speculation

    The Euro is gaining value due to speculation that the European Central Bank (ECB) won’t lower interest rates any further. This idea has been supported by comments from ECB officials. Upcoming data on the Eurozone’s HICP is expected to show a 2.1% annual increase in November, with a core increase of 2.5%. The Euro is the official currency for 20 EU countries and is the second-most-traded currency worldwide. In 2022, it made up 31% of foreign exchange transactions, with an average daily turnover exceeding $2.2 trillion, especially in EUR/USD trading. The ECB, based in Frankfurt, oversees the monetary policy for the Eurozone. Inflation data, such as the HICP, plays a crucial role in deciding interest rates. The value of the Euro is also affected by economic indicators and trade balances, with strong data usually leading to a stronger currency. Currently, the EUR/USD rate is above 1.1600, mainly due to a weakening US dollar. The latest US Manufacturing PMI stands at 48.2, marking nine straight months of contraction. This situation puts pressure on the Federal Reserve, raising expectations for a rate cut in their upcoming December 9-10 meeting, with market probability now around 87%.

    Fed Rate Outlook

    Evidence of a slowing US economy further supports this outlook. The Non-Farm Payrolls report from November showed job growth of 145,000, which is less than expected. Additionally, the latest Core PCE inflation is down to 2.9% year-over-year. These figures give the Fed strong reasons to consider easing their monetary policy to help the economy. Meanwhile, the Euro has some support as it seems the ECB is done making rate adjustments for now. Recent comments from ECB officials indicate they are satisfied with current borrowing costs. German business sentiment also appears to be stabilizing. This creates a policy gap that favors the Euro against the dollar, in stark contrast to the rate hikes we experienced earlier in 2023. Create your live VT Markets account and start trading now.

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