LONDON, Dec 7 Reuters The euro grazed a threeweek low on Thursday, driven by mounting expectations that the European Central Bank ECB may cut rates as early as March, while the prospect of a shift in Japanese policy gave the yen its biggest oneday boost since January.

The euro is heading for its biggest weekly fall since May, fuelled by a dramatic repricing of interest rate expectations for 2024, although caution around Friday39;s U.S. nonfarm payrolls has kept trading volatility subdued.

Falling inflation, a slowdown in major economies such as Germany and softness in the labour market have prompted traders to assume rates will fall to 3.0, from 4 currently, by September, from an expectation of 3.4 just two weeks ago.

As a result, the euro has hit eightyear lows against the Swiss franc and threemonth lows against the pound this week.

The speed of the dovish repricing for the euro zone has been more aggressive than it has been for the Fed and the other G10 central banks. But big difference is there is enough in the data still for the Fed to push back, TraderX strategist Michael Brown said.

What can the ECB point to that justifies them pushing back on the rapid pace of easing next year? he said.

The ECB meets next Thursday for its final meeting of 2023. There has been very little resistance from policymakers to the recent repricing of rates, with even known hawk Isabel Schnabel taking rate hikes off the table.

The question of a rate cut could emerge in 2024, ECB…