Dollar Reaches New Heights Against Euro on First Trading Day of 2025
The dollar surged to new heights against the euro on Thursday, the first trading day of 2025, building on its gains from the previous year. This rise is attributed to expectations of maintaining high American interest rates, surpassing those of many other major economies.
The euro plummeted to 1.0314 dollars, its lowest level since November 2022, recording a decline of approximately 0.3% over the day. Since its peak in late September above 1.12 dollars, the European currency has lost nearly 8%, feeling the effects of the recent surge in the greenback.
Markets expect significant interest rate cuts from the European Central Bank in 2025, with at least four 25-basis-point reductions anticipated. In contrast, the US Federal Reserve may take a more cautious approach and limit its rate cuts, thereby strengthening the dollar's appeal.
This divergence in monetary policies is supporting demand for the dollar, placing it in a position of strength against the euro, while exacerbating the pressure on the European currency.
