The European currency is weighed down by the strength of the American currency in anticipation of the inflationary policies envisaged by President-elect Donald Trump.
The dollar rose to a new high in more than two years against the euro this Thursday, driven by the now imminent return of Donald Trump to the White House, who plans policies likely to boost American inflation . Around 11:55 a.m. GMT (12:55 p.m. in Paris), the American currency climbed 0.23% against the euro, to 1.0332 dollars per euro, after reaching 1.0314 dollars, a peak since the end of November 2022 against the European currency. The greenback also gained 0.51% against the British currency, to 1.2453 dollars per pound, after peaking at its highest since April 2024, at 1.2435 dollars.
«This is simply a continuation of the dollar’s upward trend seen during the latter part of last year, particularly after Donald Trump’s victory.estimated Russ Mold, analyst at AJ Bell. The American Federal Reserve (Fed) is now only considering two interest rate cuts this year, compared to four previously projected. Analysts say the European Central Bank (ECB) is likely to cut rates at a faster pace than the Fed, given weak growth in the eurozone, where inflation is hovering near the 2% target set by the the ECB.
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In Japan, the currency is holding steady
On the Bank of England (BoE) side, the market still projects two to three cuts in 2025. Conversely, the Japanese currency is holding steady against the greenback, benefiting from the optimism of Japanese economists towards further increases in interest rates. the Bank of Japan (BoJ) in 2025. Thursday, around 11:55 a.m. GMT, it was almost stable at +0.01% against the dollar, at 157.21 yen. Drawing on Japanese economists, the Japan Times estimated on Wednesday that the BoJ is likely to raise rates two or three times this year, which could bring the key rate to 1.00% for the first time in three decades.
Since March, the BoJ has begun normalizing its monetary policy by raising its rates twice in 2024. But during its last meeting in December, its governor Kazuo Ueda spoke of a prolonged pause in monetary policy tightening, in the face of the climate economic uncertainty. The continued weakness of the yen could, however, “increase pressure on the BoJ to raise rates earlier this year, in January, rather than waiting until March”judged Lee Hardman, analyst at MUFG.
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