Driven by the decline of the U.S. dollar index and the marginal improvement of Eurozone economic data, the euro showed a strong consolidation trend against the U.S. dollar on December 1. As of the midday session of the Asia-Pacific market, the euro/dollar pair was quoted at 1.1607, up 0.1035% from the previous trading day, with an intraday high of 1.1615. Behind this trend, the clear policy signals from the European Central Bank (ECB) to stabilize expectations have become a core support, forming a sharp contrast with the Fed’s interest rate cut expectations.

On November 30, ECB President Christine Lagarde stated publicly that the current deposit facility rate of 2.00% is at the “correct level”, which has effectively controlled inflation, and there is no urgency to adjust borrowing costs. This view was echoed by Vice President Luis de Guindos and Chief Economist Philip Lane. Guindos emphasized that there is only a “limited risk” of excessively low inflation, while Lane pointed out that the slowdown in wage growth will help reduce non-energy costs. There is a clear consensus among policymakers, and market expectations for an interest rate cut at the December monetary policy meeting are fading.

In terms of policy path, the ECB has kept interest rates unchanged for three consecutive times, and institutions generally predict that this trend will continue in December. Although the money market still shows an 87% probability of an interest rate cut, central bank governors of countries including Croatia and Greece have explicitly opposed hasty rate cuts. Fidelity International predicts that if the Fed and the ECB complete their easing cycles simultaneously in 2026, the euro/dollar pair is expected to rise to 1.25. ING Group, however, warns of potential risks from U.S.-EU tariff disputes and economic divergence between Germany and France. The ECB’s monetary policy meeting on December 18 will be a key node for the exchange rate trend.