Euro Gains Ground, Dollar Retreats

28 Nov 2024 , 10:28 AM

Following hawkish comments from a central bank policymaker, the euro held onto its biggest gain in four months on Thursday. Meanwhile, the yen surged towards its highest week in three months due to mounting speculation that Japan may raise interest rates in December.

Due to the U.S. Thanksgiving holiday, the actions halted the dollar’s recovery ahead of what is probably going to be light trading for the remainder of the week.

The euro rose 0.7% to $1.0560 overnight as investors retreated from rate drop bets after European Central Bank board member Isabel Schnabel told Bloomberg that rate cuts should be gradual and move to neutral, not accommodating, territory.

It encounters resistance at $1.06, which might be tested if Germany’s inflation data, which is coming later in the day, shows higher-than-forecast growth.

In contrast, the yen has experienced a two-day rapid rally, breaking past its 200-day moving average to reach 151.50 per dollar. In Asia’s morning session, it was little weaker and was trading at about 160 to the euro.

The majority of analysts surveyed by Reuters anticipate a rate hike, and rates pricing indicates a 60% possibility of a 25 basis point rate hike in Japan next month, up from nearly 50% a week ago.

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