The euro falls to the lowest level in 2 years against the US dollar!
The euro fell 0.9% against the US dollar, hitting a mid-point of 1.02 on Thursday, its lowest level since Nov. 21, 2022. The single currency extended weakness against its counterpart at the start of the new year on concerns about the economic outlook of the Eurozone, political instability and a monetary policy mismatch between the European Central Bank (ECB) and the Federal Reserve (Fed).
The EUR/USD pair has fallen sharply from its 2024 peak above 1.12 in September, marking a 9% decline over three months. The strength of the US dollar, boosted by Donald Trump's presidential victory, has exacerbated the euro's weakness since November. Analysts expect the euro-dollar pair to reach parity in 2025, a level last seen in 2022 when Russia launched a full-scale military operation in Ukraine. Adding to the Eurozone's woes, Ukraine stopped the transit of Russian gas to Europe after a five-year contract expired on Wednesday.
This development has forced many European countries to rely on more expensive heating alternatives during a harsh winter. Natural gas futures rose to a two-year high of more than $4 per million British thermal units (MMBtu) earlier this week, before retreating to 3.66 MMBtu during Friday's Asian session .
Weak economic data further underscores the challenges. S&P Global's final December manufacturing PMI for France and Germany showed continued contraction in the sector. France reported its biggest drop in manufacturing activity since May 2020, while Germany's manufacturing output hit a three-month low.
In December, France's central bank revised its economic growth forecast for 2025 to 0.9%, from a previous forecast of 1.2%. Both France and Germany are grappling with political instability as ruling party coalitions crumble amid growing far-right power.
Globally, the Eurozone faces increasing risks under Trump's presidency. The US president-elect has vowed to impose higher tariffs on imports from China, Canada and Mexico. While no clear announcements have been made, European automakers are particularly vulnerable to potential tariff increases.
The US dollar has risen amid a sharp shift in the Fed's monetary policy and the Trump presidency. The dollar index rose above 109 on Thursday, the highest since November 2022. The Fed kicked off the easing cycle with a big 50 basis point rate cut in September. However, the bank switched to a much more hawkish stance after resilient jobs data and improving other economic data.
In December, the Fed cut interest rates by 25 basis points as expected. However, the bank signaled a much more hawkish stance on its easing cycle in 2025. The Fed's dot chart, a chart that projects the future path of interest rates, showed a half percentage rate cut in 2025, compared with a full percent decrease predicted in September.
In contrast, the ECB is likely to accelerate its rate-cutting cycle in 2025. The ECB cut its policy rate by a full percentage point in 2024, and analysts expect another percentage-point cut next year, while The Eurozone continues to face economic and political headwinds. These include continued political instability, a slowdown in the Chinese economy and the implications of a Trump presidency, all of which contribute to a bleak economic outlook for the region.
Poll
In which European country did the prices for holidays increase the most? - Inflation in November, higher than in October. Albania among the countries with growth
The end of the year holidays often bring a noticeable increase in prices in many countries, due to the high demand for festive products and services. The......
Kafeja, me rekordin e tretë më të lartë në nëntor Përgatitjet për sezonin festiv rritën importet
Të dhënat e tregtisë së jashtme për muajin nëntor të këtij viti pasqyrojnë zhvillime të rëndësishme lidhur me importin e disa kategorive të produkteve, duke......
Stabilization of the economy in Turkey, inflation falls - Turkish lira, at the lowest levels against the dollar
Annual inflation in Turkey fell to 44.38% in December, while price increases came in the education and housing sectors. The Turkish Lira fluctuated little,......
"The car will not be used every day" - Measure in Albania within 2025, draft: Restriction, according to vehicle license plates
Limiting the use of vehicles on certain days of the week". This is one of the measures that must be implemented within 2025 in order to reduce greenhouse gas......
Europol unmasks the network of hundreds of illegal providers of sports broadcasts!
The operation involved 15 countries, including Bulgaria, Croatia, France, Germany, Italy, the Netherlands, Romania, Sweden, Switzerland and the UK. An......
How has this year started for the main currencies in the local market?!
The American dollar seems to have recovered some points from last year as it was bought today at 93.9 Lek and sold at 95.5 Lek registering a slight increase......
Tender corruption - Agreement on prevention: In-depth investigations and measures for offenders
Prevention of corruption in tendering procedures is the focus of a Memorandum of Cooperation signed between the Public Procurement Agency and the Minister of......
Taxes, new deadline for declaring personal income - DIVA, 'tool' for wealth control, fine for those who do not declare
Taxes have established new conditions and deadlines for the declaration of personal income. This year, all those individuals who, during 2023, have been paid......
