Euro hits almost seven-week high, dollar broadly lower

Source: Reuters.

Business activity in the euro zone expanded at its fastest pace in two-and-a-half years in November as a robust service sector more than offset manufacturing weakness.

“There's been this upward creep in good data for Europe, which I think the market is beginning to pay attention to,” said Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank’s NY Branch.

Several other European currencies were also stronger on Wednesday, potentially indicating optimism over an end to the Russia-Ukraine war, Englander said. “These are all currencies that would benefit from peace in Ukraine.”

The Kremlin said on Wednesday that President Vladimir Putin accepted some US proposals aimed at ending the war in Ukraine and rejected others but that Russia was ready to meet US negotiators as many times as it took to reach an agreement.

The euro was last up 0.43% at $1.1673 and reached $1.1677, the highest since Friday, 17 October 2025. The Swedish crown strengthened 0.76% versus the dollar to 9.371. Against the Norwegian krone, the dollar weakened 0.6% to 10.061.

Technical factors may also be boosting the euro and hurting the dollar, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

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"Since 17 September 2025 the dollar has drifted higher, other currencies have drifted lower, but that looks mostly corrective in nature and I wonder if we've begun the next leg up to rechallenge the highs (in the euro) set earlier this year," he said.

The euro reached a four-year high of $1.1918 on 17 September 2025.

The dollar index was down 0.45% at 98.85 and fell as low as 98.82, the lowest since 29 October 2025.

The greenback briefly extended losses after the ADP employment report showed that US private payrolls unexpectedly declined in November. Private employment decreased by 32,000 jobs last month. Economists polled by Reuters had forecast an increase of 10,000 jobs.

The US currency has weakened in recent days on speculation that White House economic adviser Kevin Hassett will take over as Federal Reserve Chair after Jerome Powell’s term ends in May and push for more rate cuts.

The Wall Street Journal reported on Tuesday that the Trump administration canceled interviews that were set to begin this week with finalists to be the next Fed Chair, suggesting that Trump has already chosen Powell’s successor.

"(Hassett’s) resume is very strong. The only question is, is he going to be able to be independent of the pressures that are bound to come from the White House?" said Englander.

Bond investors have expressed concerns to the US Treasury that Hassett could aggressively cut interest rates to align with U.S. President Donald Trump's preferences, the Financial Times reported on Wednesday.

Trump has repeatedly stated that the Fed is being too slow to cut rates. The new Fed Chair, however, will not themselves be able to sway Fed policy that is decided by a committee.

US Treasury Secretary Scott Bessent on Wednesday expressed optimism about the economic outlook next year, but said interest rate cuts were still needed given weakening sectors including housing.

Fed funds futures traders are pricing in 89% odds of a rate cut at next week's Fed meeting, according to the CME Group's FedWatch Tool.

The Japanese yen strengthened 0.47% against the greenback to 155.16 per dollar.

The Japanese currency has gained since Bank of Japan Governor Kazuo Ueda said on Monday that the central bank will consider the "pros and cons" of raising interest rates at its next policy meeting, giving the strongest signal yet of a hike later this month.

Sterling rose 1.01% to $1.3346.

A survey on Wednesday showed that growth among Britain's services firms declined last month and employment contracted the most since February in the run-up to the government's budget.

In cryptocurrencies, bitcoin gained 1.25% to $92,768. It has rebounded from a seven-month low of $80,553 reached on 21 November.