The euro strengthened in European trading on Wednesday against a basket of global currencies, extending its gains for a third straight session versus the US dollar and touching a one-week high. The move was supported by the ongoing decline in the greenback and optimism around progress toward a potential peace agreement between Russia and Ukraine.

With uncertainty still surrounding the likelihood of a European Central Bank rate cut in December, investors are awaiting further economic data on inflation, unemployment, and growth across the eurozone to better assess the path of ECB policy easing ahead.

Price Overview

EUR/USD rose 0.2% to 1.1592 the highest in a week from an opening level of 1.1570, after touching an intraday low of 1.1563.

The euro ended Tuesday up roughly 0.45%, marking a second straight daily gain, supported by positive developments in the peace talks as well as weak US economic data.

US Dollar

The dollar index fell about 0.25% on Wednesday, marking a third consecutive decline and hitting a one-week low, reflecting continued downward momentum in the US currency against both major and minor counterparts.

The decline comes as markets price in a higher probability of a Federal Reserve rate cut in December, driven by a stream of softer US data and more dovish-leaning commentary from several Fed officials.

Ukraine Peace Framework

Diplomacy has intensified in recent weeks as efforts accelerate to end the more than three-year war in Ukraine. The initial US proposal a 28-point framework served as a baseline for talks among the US, Ukraine, and several European partners. Kyiv rejected the early draft as being overly favorable to Moscow, particularly on issues of sovereignty, borders, and regional security guarantees.

This pushback prompted a new round of negotiations in Geneva, focused on reshaping the plan into something more balanced. The talks resulted in a joint US-Ukraine statement announcing an updated and refined framework with adjustments to sensitive sections and a stronger emphasis on territorial integrity and security assurances.

President Volodymyr Zelensky described the new version as more balanced and containing the right elements, signaling a softer stance from Kyiv. The European Commission also welcomed the progress, calling the revised plan a realistic basis for advancing negotiations.

However, the framework still awaits an official response from Moscow, which says it has not yet received clear details. Major points of contention such as the status of disputed territories, Ukraines NATO ambitions, and future security guarantees remain unresolved.

Even so, analysts view the resumption of structured, multilateral dialogue as a meaningful shift away from the military stalemate toward a more mature diplomatic track.

Bullish Sentiment

Chris Turner, head of FX strategy at ING, said that while markets have seen similar optimism before, signs of a peace framework are beginning to appear in currency trading. He added that falling energy prices could also support the euro.

SEB Bank noted in September that the euro could rise as much as 7.5% against the dollar if a credible peace agreement is reached.

SEB analysts said such a breakthrough would be a game-changer for European growth and inflation dynamics, boosting household purchasing power and revitalizing the industrial sector.

European Rates

Market pricing for a 25-basis-point ECB rate cut in December remains steady around 25%.

Investors are awaiting further eurozone data on inflation, unemployment, and wage trends to refine expectations for the December meeting.