European markets inched higher on Thursday as growing confidence in a Federal Reserve rate cut next month helped support risk appetite during a quiet, holiday-shortened trading session. The dollar held steady, while bitcoin stayed above recent lows, adding to the more optimistic tone across global markets.

With U.S. exchanges closed for the Thanksgiving holiday, activity slowed across major asset classes. Even so, stocks maintained their positive momentum as investors moved past concerns about an AI-driven bubble that had rattled equities earlier in November.

The STOXX 600 climbed 0.2 percent, lifted by gains in defense and technology companies that offset declines in healthcare shares. Analysts said the prospect of a Fed rate reduction, paired with a solid earnings season, continues to encourage buyers.

“As long as your main engine is going nicely, then a lot of the worries about valuations just get pushed up to the back foot for the time being, until something else comes along,” IG chief markets strategist Chris Beauchamp said. He noted that renewed anxiety about AI spending remains a potential threat to the rally, calling it “the market’s kryptonite at the moment.”

Currencies were largely unchanged. Sterling pulled back from a near four-week high reached after British finance minister Rachel Reeves’ budget eased concerns about the United Kingdom’s long-term fiscal outlook. The pound held at $1.324, while the euro was steady at $1.1593.

The flow of U.S. economic reports has resumed after the record 43-day government shutdown ended in mid-November, though many of the data releases remain outdated and provide little clarity on current trends. As a result, markets are relying heavily on remarks from Federal Reserve officials. Recent comments from San Francisco Fed President Mary Daly and Fed Governor Christopher Waller have strengthened expectations for a December rate cut. Traders now see an 85 percent chance of a reduction, compared with 30 percent a week ago, according to CME FedWatch.

In currency trading, the Japanese yen drew increased attention after strengthening to 156.375 per dollar from nearly 158 the previous week. Investors are monitoring for potential intervention by Tokyo following repeated verbal warnings from Japanese authorities. Prime Minister Sanae Takaichi said on Wednesday that Japan would not face a British-style “Truss moment,” dismissing concerns about fiscal instability. Sources told Reuters that the Bank of Japan is preparing markets for a possible rate hike as soon as next month to help guide the yen’s trajectory.

“There’s a general feeling that Japanese policymakers will hold off from intervening unless (dollar yen) were to rise to 158.00 to 160,” said David Morrison, senior market analyst at Trade Nation.

Bitcoin gained 0.7 percent to $90,800, putting it on track to end a four-week losing streak with a nearly 3 percent rise. Gold slipped 0.1 percent to $4,159 an ounce.

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