The euro plunges to its lowest level against the dollar in two years: what is happening?

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– The euro fell on the morning of Friday, November 22, by 0.45% against the greenback, to 1.0426 dollars per euro.

The euro fell this Friday, November 22 to its lowest in two years against the dollar, and the pound is falling, both undermined by indices of economic activity in November lower than expected, which reinforce forecasts of rate cuts of their central banks. Around 10:35 a.m. GMT (11:35 a.m. in Paris), the European currency fell by 0.45% against the greenback, to 1.0426 dollars per euro, after falling more heavily by 1.32% to 1.0335 dollars, its lowest level since end of November 2022 against the greenback.

Also weighed down by an activity index, the pound fell by 0.47% against the American currency, to 1.2529 dollars, after having touched 1.2487 dollars, a lowest since May. Both currencies suffer from a divergence between monetary policies of their central banks and that of the Federal Reserve (Fed), expected to be firmer than expected since Donald Trump won the presidential elections on November 5 in the United States.

Decline in economic activity in the euro zone

Private sector activity in the euro zone contracted in November, to 48.1, after 50 in October, according to the Flash PMI published Friday by S&P Global. Calculated on the basis of company surveys, it fell to its lowest level in 10 monthsand below the expectations of economists. A number above the 50 mark signals growth in activity, while a number below reflects a contraction.

“Eurozone data increased the likelihood of further rate cuts from the European Central Bank (ECB) next year”summarizes Kathleen Brooks, from XTB. If the market was already “certain that the ECB will reduce its rates next month”he now envisages it being a drop of half a percentage point, adds the analyst. In the United Kingdom, private sector activity fell to the lowest in more than a year, to 49.9 in November, compared to 51.8 the previous month, according to the Flash PMI, a figure also lower than projections.

Bitcoin continues its crazy rise

Accordingly, “expectations of a rate cut at the December meeting” of the Bank of England (BoE) have increased, as have those of other cuts in 2025, notes Ms. Brooks. For the BoE “the key question will now be to assess whether the potential inflationary impact of tax increases” planned by the recent British budget “compensates for lower demand”tempers Sanjay Raja, analyst at Deutsche Bank.

For its part, bitcoin reached $99,505.45 on Friday, hot on the heels of highly anticipated threshold of $100,000. The most capitalized cryptocurrency continues to ride the wave of enthusiasm in the sector generated by the election of Donald Trump.