The euro reached a nearly seven-week peak against the dollar on Wednesday, supported by data indicating growth in euro zone business activity. In contrast, disappointing U.S. jobs data and anticipations of additional U.S. rate cuts exerted pressure on the dollar. In November, business activity in the euro zone experienced its most rapid growth in two-and-a-half years, driven primarily by a strong service sector that effectively compensated for the challenges faced in manufacturing. “There has been a gradual increase in positive data for Europe, which I believe the market is starting to acknowledge,” stated Steve Englander. On Wednesday, several other European currencies exhibited strength, which may suggest a growing optimism regarding a resolution to the Russia-Ukraine conflict, according to Englander. “These currencies stand to gain from a resolution in Ukraine.” The Kremlin announced on Wednesday that President Vladimir Putin has accepted certain U.S. proposals intended to resolve the conflict in Ukraine while dismissing others. However, Russia expressed its willingness to engage with U.S. negotiators as often as necessary to achieve a consensus.

The euro was recently up 0.43% at $1.1673, having peaked at $1.1677, marking its highest level since October 17. The Swedish crown appreciated by 0.76% against the dollar, reaching a value of 9.371. In relation to the Norwegian krone, the dollar experienced a decline of 0.6%, settling at 10.061. According to Marc Chandler, technical factors could be contributing to the euro’s strength while negatively impacting the dollar. “Since September 17th, the dollar has experienced an upward trend, while other currencies have shown a downward movement. However, this appears to be largely corrective, leading me to question whether we are on the verge of the next phase that may test the earlier highs in the euro established this year,” he stated. The euro attained a four-year peak of $1.1918 on September 17. The dollar index decreased by 0.45% to 98.85, reaching a low of 98.82, marking the lowest level since October 29. The dollar experienced a temporary decline following the release of the ADP employment report, which indicated an unexpected drop in U.S. private payrolls for November. Last month, there was a reduction of 32,000 jobs in private employment.

The U.S. dollar has experienced a decline recently amid speculation regarding the potential appointment of White House economic adviser Kevin Hassett as the next Federal Reserve Chair following Jerome Powell’s term conclusion in May, which may lead to an advocacy for additional rate cuts. Sources indicated on Tuesday that the Trump administration has called off interviews scheduled for this week with candidates for the next Fed Chair, implying that Trump may have already selected Powell’s successor. “Hassett’s resume demonstrates significant strength.” The critical inquiry remains whether he will maintain independence from the inevitable pressures originating from the White House,” stated Englander. Concerns have been raised by bond investors to the U.S. Treasury regarding the possibility that Hassett may implement aggressive interest rate cuts to align with the preferences of U.S. President Donald Trump, as per reports. Trump has consistently expressed that the Federal Reserve is not acting swiftly enough to lower interest rates. The new Fed Chair, however, will not have the authority to influence Fed policy, which is determined by a committee. U.S. Treasury Secretary Scott Bessent on Wednesday conveyed a positive perspective regarding the economic outlook for the upcoming year, while emphasizing that interest rate reductions remain necessary due to the ongoing challenges in sectors such as housing.

Traders in Fed funds futures are assigning an 89% probability to a rate cut at the upcoming Fed meeting. The Japanese yen appreciated by 0.47% against the US dollar, reaching a value of 155.16 per dollar. The Japanese currency has appreciated following comments from Bank of Japan Governor Kazuo Ueda on Monday, indicating that the central bank will evaluate the “pros and cons” of increasing interest rates at its upcoming policy meeting, marking the clearest indication of a potential hike later this month. The value of Sterling increased by 1.01%, reaching $1.3346. A survey conducted on Wednesday indicated a decline in growth among Britain’s services firms last month, with employment experiencing its most significant contraction since February ahead of the government’s budget announcement.