Euro Holds Steady Above 1.1600 as Expectations for a December Fed Rate Cut Surge to 87%

The euro maintained firm support above the 1.1600 level on Friday as traders raised their bets that the Federal Reserve will cut interest rates next month. The EUR/USD pair is set to finish both the week and the month in positive territory, gaining 0.81% this week and 0.59% in November. The pair is currently trading near 1.1601 after recovering from lows of 1.1555.

Fed Easing Expectations Strengthen EUR/USD

The US Dollar lost momentum as the probability of a 25-basis-point rate cut in December climbed to 87%, according to the CME FedWatch Tool. This sharp move followed dovish comments from New York Fed President John Williams and Fed Governor Christopher Waller, who both indicated support for easing policy at the upcoming meeting.

While the US economic reports were mixed, they were not strong enough to push the Dollar higher. Producer inflation held steady, and jobless claims declined slightly compared to the previous week, showing moderate stability in the labor market.

Eurozone Inflation Surprises Offer Additional Support

European data presented a mix of outcomes, but key inflation readings came in stronger than expected:

• Germany’s retail sales for October were weaker than forecast.
• Eurozone HICP for November rose more than expected, moving close to the 3% threshold.
• France’s Q3 GDP matched earlier estimates.
• Spain’s HICP increased to 3.1%, beating the forecast of 2.9%.

Because the European Central Bank (ECB) has signaled that its rate-cutting cycle is likely done, the higher inflation data helps keep the euro supported. With the Fed expected to ease and the ECB on hold, the broader bias for EUR/USD remains upward.

Key US Data to Watch Next Week

The upcoming week features major US economic releases that could influence the Fed’s December decision. Important reports include:

• ISM Manufacturing PMI
• ISM Services PMI
• US Industrial Production
• ADP Employment Change
• Initial Jobless Claims (week ending November 29)

These numbers will determine whether December’s rate-cut expectations remain intact.

Market Drivers: Weak Dollar Helps Lift the Euro

• The US Dollar Index (DXY) slipped to 99.44, highlighting broad Dollar pressure.
• Germany’s HICP rose to 2.6%, beating expectations of 2.4%.
• France’s GDP improved slightly, growing 0.1% in Q3.
• Spain’s HICP climbed above the 3% mark again, landing at 3.1%.

These readings support the euro and give buyers more confidence.

Technical View: EUR/USD Holds Around 1.1600, Awaiting Breakout

EUR/USD continues to consolidate near 1.1600, with buyers lacking the momentum needed for a clean breakout.

• A move above 1.1620–1.1643, where the 50-day and 100-day SMAs converge, would strengthen bullish momentum.
• Clearing this zone would expose 1.1650, followed by a potential test of 1.1700.

However, if the pair drops below 1.1550, sellers could take control.

• The next downside target is 1.1500.
• Further losses may lead to the November 5 low at 1.1468, with additional support at the 200-day SMA near 1.1431.

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