The euro dropped to $1.020, its lowest since October 2022, as investors scaled back expectations for rate cuts by the European Central Bank (ECB). This shift reflects growing concerns about persistent inflation, geopolitical instability, and the global economic outlook, including the effects of US policies under Donald Trump and the UK's fiscal issues. Also, last week's strong US jobs report led investors to question whether interest rates will fall at all this year. Rising energy prices have further fueled inflation fears, with crude oil surpassing $80 per barrel amid falling Russian exports due to increased US sanctions. European natural gas prices also rose 4% last month, influenced by a cold snap and Ukraine halting Russian gas shipments. Investors are now looking to the ECB's December meeting minutes and upcoming Eurozone final inflation data for insights into future monetary policy moves.
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