The euro gained ground against major peers on Friday, extending its best weekly performance since September, as ECB Governing Council members pushed back against market expectations for aggressive rate cuts. Traders say the single currency’s momentum reflects growing conviction that the ECB will maintain higher rates for longer amid sticky services inflation across the eurozone.
Market participants are recalibrating positions after ECB Vice President Luis de Guindos warned Thursday that underlying price pressures remain "more persistent than anticipated," while Bundesbank President Joachim Nagel emphasized the central bank's data-dependent approach. This rhetoric contrasts sharply with the Federal Reserve's more dovish tilt earlier this month, creating fresh divergence dynamics that currency strategists note could support the euro through year-end. "The policy gap is narrowing faster than expected," said one London-based FX trader. "That changes the calculus for euro-dollar positioning heading into December."
Meanwhile, gold prices trended higher for a fourth straight day as investors sought refuge from renewed Middle East tensions following reports of disrupted shipping routes in the Red Sea. The precious metal's upward trajectory mirrors similar haven-driven moves in the Swiss franc and US Treasuries, though analysts caution that thin post-Thanksgiving liquidity could amplify volatility. Energy markets also showed strength, with crude oil futures climbing amid concerns about winter supply adequacy and ongoing OPEC+ production discipline. "Geopolitical risk premium is back on the menu," observed a senior commodities strategist, pointing to increased hedging activity by institutional players.
Technical indicators suggest the euro's recent advance has breached key moving averages that had capped rallies since July, though momentum oscillators are flashing overbought conditions that may prompt near-term consolidation. Traders are now watching for next week's eurozone inflation data and US jobs report to validate or challenge the current policy divergence narrative. For gold, the next psychological barrier looms large, with market participants noting that sustained haven demand could test resistance levels not seen since October's peak. As November draws to a close, positioning data indicates asset managers have trimmed dollar bullish bets for the second consecutive week, reflecting broader uncertainty about the US growth trajectory.
Disclaimer: This analysis is AI-generated for educational purposes. Traders should verify all information and conduct their own research before making trading decisions.