The euro held below $1 in October, not far from a 20-year low of $0.95 hit at the end of September, as investors doubt the ECB will be able to fight against inflation while protecting an economy at increasing risk of recession.
The European Central Bank is expected to continue hiking interest rates by large increments in the coming months after the inflation rate in the Euro Area hit an all-time high of 10% in September, well above the central bank's target of 2%.
Still, Bank of France Governor Francois Villeroy de Galhau urged caution about rising the deposit rate above 2% and called for a more flexible and possibly slower rate hike path in 2023.
Also, signs that the US economy is cooling down, sparked bets for less aggressive tightening by the Federal Reserve, which in turn, led investors to reduce bids on ECB rate hikes.
Meanwhile, updated PMI data showed business activity deteriorated for three straight months, indicating falling GDP.
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