Euro Ends 2023 at 5-Month HighThe euro stabilized around $1.1 at the end of 2023, up nearly 3% for the year and on course for a third straight month of gains. It has also remained at its highest level since late July, as investors foresaw more pronounced interest rate reductions from the Federal Reserve in the upcoming year, denting the appeal of the greenback.
Presently, markets reflect an approximately 80% likelihood of a rate reduction starting in March 2024, with an expectation of over 150 basis points of cuts throughout the next year.
Across the pond in Europe, the European Central Bank is anticipated to trim borrowing costs in the following year, albeit at a slower pace than the Federal Reserve, despite efforts from ECB policymakers to adopt a more hawkish stance and as investors evaluate signs of easing inflation and potential recession risks.
