Euro holds steady after ECB keeps rates, Lagarde to leave early

what happened

The euro was little changed against the dollar on Thursday after the European Central Bank left interest rates unchanged. The bank described the move as widely expected, but warned that inflation risks were rising because of higher energy costs. At the same time, the ECB announced that President Christine Lagarde will resign early, stepping down on February 7 instead of the end of her term in October 2027.

According to Reuters, the euro was last up 0.11% at around $1.1163, after falling to its lowest against the dollar since May. Separately, US Commerce Department data showed inflation accelerated in September as gasoline and other goods became more expensive, while the economy grew faster than expected in the third quarter. Markets now price in a nearly 80% chance of a Federal Reserve rate hike in December, and the dollar index fell 0.08% to 102.02.

why it matters

For currency traders, two signals stand out: the ECB has openly left the door open to a December rate hike, and the Fed appears to be moving in the same direction. The EUR/USD pair therefore depends on which central bank turns out to be tighter. The leadership change at the ECB adds uncertainty for 2027. Attention also turns to the yen and the New Zealand dollar: the Bank of Japan concludes its meeting on Friday and is expected to hold rates, while the Reserve Bank of New Zealand kept its rate at 2.75%.

market impact

Euro and dollar: ECB signals of a possible December hike support the euro, while stronger US inflation supports the dollar

• ↔EUR/USD mixed — the ECB hint of a December hike supports the euro, while Lagarde's exit and Fed hike bets pull the other way

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instruments