The Euro continued to weaken against major currencies within the G-10 group, dropping below the key level of 1.08 against the US dollar due to factors such as below-target inflation, ongoing economic weakness, and political uncertainties. The upcoming US presidential election on 5 November has also unsettled market sentiment, with analysts warning of the Euro falling to parity with the US dollar if Donald Trump is re-elected. Trump’s proposed tariffs on Europe and other countries could deepen the Euro’s decline, leading the European Central Bank to make further rate cuts to maintain competitiveness in exports.
Additionally, the Eurozone’s annual inflation rate fell below target, leading to the ECB’s third rate cut of the year. At the IMF and World Bank meetings, ECB President Christine Lagarde emphasized disinflation concerns, although the IMF downgraded its growth forecast for the euro area, indicating a slower economic expansion next year.
On the other hand, global government bond yields have surged, particularly in US Treasury yields, following strong jobs data, leading investors to expect the Federal Reserve to slow rate cuts and support the US dollar. The Euro has been one of the weakest currencies in the G-10 group, with lower yields on eurozone government bonds contributing to its decline compared to the US dollar and other major currencies. The outlook for economic growth in major European nations remains weak, exerting further pressure on the single currency.
Source
Photo credit www.euronews.com