Euro falls before November: ECB interest rate policy under criticism!

Euro falls before November: ECB interest rate policy under criticism!

In recent months, the euro has experienced a notable appreciation against the US dollar. By the end of the third quarter of 2025, the increase in value is an impressive 11.9%. This uptrend is primarily driven by dollar-specific headwinds, such as Morningstar reported. This means that the euro is on an interesting course, even if it is confronted with structural challenges in the eurozone.

Nevertheless, the euro remains important internationally: its share in global portfolio decisions is increasing, indicating that investors are increasingly interested in the European currency. Valuation indicators show that the euro is even moderately undervalued compared to the dollar. However, the euro lacks a clear strategy to maximize its potential.

Political and economic uncertainties

In light of current events, the focus in the coming weeks will be particularly on the interest rate policy of the European Central Bank (ECB). The ECB is expected to decide on possible interest rate cuts on Thursday, with some analysts even expecting a half-point reduction. According to a Morgan Stanley forecast, the euro could fall toward parity with the dollar in the next few months and fall to $1.02 by the end of the year, a depreciation of about 7%. This assessment influences confidence in the currency and is categorized by the same source as worrying for the Eurozone as political uncertainties increase, particularly in Germany.

Although markets are showing some skepticism, with bullish commitments currently less in demand, monetary policy in the Eurozone is a key driver of the euro's future performance. Loud financial market world The money markets are expecting an easing of monetary policy by around 60 basis points this year, while in the USA 110 basis points are expected.

Long-term prospects for the euro

Given the current and future challenges, the euro faces a number of factors that affect its stability and credibility. A stable and credible central bank, like the ECB, currently has inflation expectations under control, which helps the euro continue to rise in price. Nevertheless, geopolitical risks, particularly due to dependence on energy sources and trade relationships, should not be neglected. Dedicated to this aspect Morningstar particular attention, as a reform of the EU's institutional structures is necessary to effectively address the challenges.

While the euro has no intention of replacing the dollar as the leading currency, its stability remains crucial to economic development in the eurozone and to the global economy as a whole. It will be interesting to see how developments at the ECB and the international market situation impact the Euro as we approach the end of the year.