Euro hits a 17-month low after the ECB holds, then closes higher

On the day the European Central Bank announced that Christine Lagarde will step down, EUR/USD fell to its lowest since May 2025 after the bank held rates, then closed 0.24% higher on our feed. US growth beat forecasts and gold fell 0.96% but held above $4,000, while USD/CAD traded below the 1.3985 tell without closing there.

The ECB and the euro

• The European Central Bank left its three key rates unchanged, with the main refinancing rate at 2.65%, as forecast, and the deposit rate at 2.50%. FXStreet said the decision was unanimous and that Lagarde told reporters the Governing Council had debated whether a hike was appropriate. Action Forex said the bank warned that the energy shock had become larger and more prolonged.

• Earlier in the session, the ECB announced that Lagarde will step down on 7 February 2027. FXStreet said EUR/USD hit a 17-month low of 1.1105, its weakest since May 2025. On our feed the low was 1.11044 at 13:19 UTC, four minutes after the decision and below 1.1111, where Action Forex said a firm break would extend the pair's larger fall. The pair then closed up 0.24% at 1.11796, its highest close since 23 October.

• investingLive reported ECB sources as saying policymakers see a December hike followed by a pause, and after the close FXStreet said Lagarde saw another hike in December as likely.

• ING said European natural gas prices (TTF) broke above €100 per megawatt-hour for the first time since 2022. FXStreet said WTI eased from its highs on Iran peace hopes but stayed above $100.

What the US data showed

• USD · Advance GDP: 3.4% annualised growth in the third quarter, against a 3.2% forecast and up from a revised 2.2%, investingLive said. Action Forex called it the fastest pace in a year.

• USD · Core PCE prices: 0.3% on the month, as forecast. Action Forex said headline PCE inflation rose to 3.6% on the year, as expected, and the core rate to 3.1%.

• USD · Initial jobless claims: 194,000, against 198,000 expected.

Gold, the pound and the loonie

• Gold fell 0.96% to $4,017.50 on our feed, its lowest close since 26 October and still its fourth in a row above $4,000; its low, $4,005.20 at 18:32 UTC, held $5.20 above that line. FXStreet said the US data cemented the case for a Federal Reserve hike at the 9 December meeting, and that a slide in US stocks failed to spark haven demand.

• The pound rose 0.37% to 1.33762, its highest close since 22 October. FXStreet said Bank of England hike bets supported it despite the strong US data, and Investing.com said sterling hit a 17-month high against the euro; EUR/GBP fell 0.14% to 0.83571.

• USD/CAD slipped 0.04% to 1.39887, below each of its previous ten closes. It traded below 1.3985, the Action Forex level our weekly wrap set as its tell, in 14 of the session's 24 hours, with a low of 1.39653 at 17:46 UTC, yet closed 3.7 pips above it, so the tell has not fired. Standard Chartered expects another 25 basis-point Bank of Canada hike in December, to 2.75%.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 80, up from 72, with its news component at its full 20 on both days, so the rise did not come from the calendar. A CTS of 54, unchanged, with its carry backdrop at 60 out of 100, and an FSI of 55, Neutral, from 54.

• Top of our strength table: the Australian dollar, first for 317 of the session's 1,438 minutes, 22% of them, a clear lead. Yet it was the only major to lose ground to the dollar: AUD/USD peaked at 0.70680 at 01:24 UTC and closed down 0.35% at 0.70288, its eighth close in a row above 0.70. The table counts minutes in each place, not the session's net move.

• Bottom: no currency clearly trailed.

• The dollar: Investing.com said it edged higher on the growth data and dipped after the ECB decision. It closed lower against six of the seven majors, from 0.04% against the Canadian dollar to 0.45% against the Swiss franc, and higher only against the Australian dollar. NZD/USD, a day after the RBNZ's surprise hold, edged up 0.14% to 0.56333. USD/JPY closed at 157.705, its third close in a row above 157.50.

This week: after the close, Tokyo's core CPI rose 2.6% on the year in October, as forecast, investingLive reported. The Bank of Japan then held its rate at 1.25% on Friday, as FXStreet had forecast; Action Forex said the vote was 8–1, with one member backing a hike to 1.50%.

Next week: the US midterms are on 3 November, and FXStreet said the Bank of England votes on 5 November.