Currency Markets Sway Amidst U.S. Thanksgiving Lull

The euro dipped against the dollar due to reduced expectations of European Central Bank rate cuts, amidst a subdued trading session during the U.S. Thanksgiving holiday. Meanwhile, other global currencies showed mixed performances, with Japan's yen recovering and Russia's rouble strengthening as central banks made policy moves.

The euro experienced a decline against the U.S. dollar on Thursday, as traders curtailed bets on further rate cuts by the European Central Bank. Broader currency movements were muted due to the U.S. holiday, causing the Japanese yen to slip but ultimately recover losses from earlier fluctuations.

U.S. markets were closed for the Thanksgiving holiday, resulting in lighter trading volumes. The dollar index rose modestly to 106.21 after previously dipping. Michael Brown from Pepperstone commented on the market's detachment from fundamentals and the pressures facing the euro zone, alongside U.S. exceptionalism.

Despite expectations, German inflation remained flat in November, drawing attention to upcoming euro zone inflation data. Investors have scaled back aggressive rate cut expectations for the ECB, noting internal euro zone challenges such as France's budget issues.

(With inputs from agencies.)