Rate differentials · ECB vs Fed · priced as of 12 November 2026
EUR/USD interest rate differential: ECB vs Fed
As of 12 November 2026, the EUR/USD interest rate differential is −150 bp: the ECB's deposit rate at 2.50% against the Fed's federal funds rate at 4.00%, in favour of the US dollar. Markets price the gap at −166 bp in six months; there is no twelve-month figure, because the Fed curve reaches only July 2027.
Over the next six months, markets price the gap to move −16 bp over six months, towards the US dollar. That six-month gap has moved −6 bp in a month.
The rate spread, now and priced ahead
| ECB (EUR) | Fed (USD) | Gap | |
|---|---|---|---|
| Policy rate now | 2.50% | 4.00% | −150 bp |
| Priced in 6 months | 3.00% | 4.66% | −166 bp |
| Priced in 12 months | 3.17% | curve ends July 2027 | n/a |
| 6-month gap a month ago | 2.93% | 4.54% | −160 bp |
The gap is EUR minus USD, in basis points (100 bp is one percentage point). Six and twelve months out is the rate implied after each bank's last meeting on or before that date. Market pricing, not a forecast. Each bank's meeting-by-meeting odds: ECB · Fed.
The carry on EUR/USD
The US dollar: the Fed pays 4.00% against 2.50%, a gap of +150 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
How the gap feeds the exchange rate, and when it does not: rate differentials explained and the carry trade explained.
Questions
What is the EUR/USD interest rate differential?
As of 12 November 2026, the EUR/USD interest rate differential is −150 bp: the ECB's deposit rate at 2.50% against the Fed's federal funds rate at 4.00%, in favour of the US dollar. Markets price the gap at −166 bp in six months; there is no twelve-month figure, because the Fed curve reaches only July 2027.
Is the ECB–Fed gap priced to widen or narrow?
Markets price the gap to move −16 bp over six months, towards the US dollar, from −150 bp now to −166 bp. A month ago (13 October) the same six-month gap was priced at −160 bp, so it has moved −6 bp since. That is market pricing, not a forecast.
Which side of EUR/USD has the carry?
The US dollar: the Fed pays 4.00% against 2.50%, a gap of +150 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
Where does this pricing come from?
Each bank's priced path comes from the market instrument behind it: Exchange-traded futures, WatchTower model for ECB, Exchange-traded futures for Fed. The rate six or twelve months out is the one implied after the last meeting on or before that date. The month-ago figure is from our daily snapshot of the same curves.
More on EUR/USD: EUR/USD analysis · EUR/USD retail sentiment · EUR/USD seasonality · Euro outlook · Euro COT positioning · ECB rate expectations · Eurozone economic surprises · US Dollar outlook · US Dollar COT positioning · Fed rate expectations · US economic surprises
Other rate differentials: GBP/USD 0 bp · USD/JPY +275 bp · USD/CHF +400 bp · AUD/USD +85 bp · USD/CAD +150 bp · NZD/USD −125 bp · EUR/GBP −150 bp · EUR/JPY +125 bp · EUR/CHF +250 bp · EUR/AUD −235 bp · all 28
In WatchTower Terminal, the Rate spread panel draws the EUR/USD gap against the price. Nothing here is financial advice.