The U.S. Federal Reserve just lent the European Central Bank (ECB) a helping hand.
The euro slumped to a two-month low against the U.S. dollar late Wednesday ET after the U.S. Fed revived the possibility of an increase in interest rates at the December meeting. A weaker currency would be a potential succor for a euro zone tackling a slump in demand for its products as well as feeble inflation.
The euro was trading at 1.0918 against the dollar, having dropped to 1.0894 shortly after the Fed announcement.
The currency move underscores the growing divergence between monetary policy on either side of the Atlantic. While the Fed is edging closer to lifting interest rates for the first time since 2006, the ECB is mulling providing more stimulus.
"The EUR trade becomes easier with the Fed and ECB on opposing tracks," said strategists at ANZ in a note.
At its meeting last week, ECB President Mario Draghi said the euro zone's trillion-euro bond-buying program will need to be "re-examined in December" as inflation remains stubbornly low amid emerging market weakness.