The Euro has collapsed during the bulk of the trading week, we continue to see the US dollar favorite against almost every other currency out there. With this major “risk off” trade, I do not see this changing.
Sterling rose on Friday close to a 23-month high against the euro as investors expected the Bank of England (BoE) to raise rates next week and follow a path of rapid monetary tightening in 2022. Analysts said the BoE's hawkish stance would boost the pound despite the tightening plans from the U.S. Federal Reserve providing some protection for the dollar. "Key rates that rise by more than 25bp (at next week’s policy meeting) would help sterling if BoE governor Andrew Bailey were able to convince the market that the BoE has a plan," Commerzbank analysts said, describing last year’s BoE announcements as "fickle."
The Euro has gone back and forth during the course of the trading session on Friday, as we are trying to stabilize heading into the weekend.
Euro zone economic sentiment deteriorated in January, data showed on Friday, pulled down by a more downbeat sentiment in the two key sectors of industry and services. The European Commission's monthly economic sentiment index fell to 112.7 points in January from a revised 113.8 in December. Selling price expectations in industry also eased to 47.7 from of 48.0 in December though among consumers inflation expectations 12 months ahead rose to 38.4 from 36.6 in December.
With GDP numbers from France and Germany affirming the ECB’s view on the economy, the focus shifts to U.S inflation.
Sterling on Friday edged up against the euro, just off its 23-month high, as investors expect the Bank of England to raise rates next week and follow a much faster path of monetary tightening than the European Central Bank in 2022. Analysts argued that the hawkish BoE stance would boost the pound, despite the tightening plans from the U.S. Federal Reserve, providing some defence also against the dollar. “Key rates that rise by more than 25bp (at next week’s policy meeting) would help sterling if BoE governor Andrew Bailey were able to convince the market that the BoE has a plan,” Commerzbank analysts said, describing last year’s BoE announcements as “fickle.”
EUR/USD managed to settle below the support at 1.1170 and is testing the next support level at 1.1150.
It’s a busy day ahead on the economic calendar, with 4th quarter GDP numbers from Eurozone member states and U.S inflation in focus.
EUR/USD settled below the support level at 1.1230 and is testing the next support at 1.1200.
German consumer sentiment improves in January. The improvement was modest, however, with consumer propensity to save on the rise.
Going into the European open, German consumer sentiment figures will draw interest ahead of key stats from the U.S.
The Euro has drifted a little bit lower during the trading session on Wednesday as we are awaiting the FOMC.
EUR/USD remains stuck near the 1.1300 level.
It’s a big day ahead for the global financial markets, with the FED’s forward guidance on the economic outlook, inflation, and interest rates key.
By Gina Lee
The Euro has plunged during the trading session on Tuesday to break below the 1.13 level in the latest round of US dollar strength.
German business sentiment improves unexpectedly in January. Pressure on the EUR remains, however, as the markets prepare for the FED policy decision tomorrow.
EUR/USD continues its attempts to settle below the support level at 1.1300.
The safe-haven yen and U.S. dollar rose on Tuesday while the risk-sensitive New Zealand dollar fell with the euro amid escalating worries about both a potential military conflict in Ukraine and a faster pace of Federal Reserve policy tightening. The Australian dollar rose briefly after strong consumer price numbers boosted the case for a Reserve Bank interest rate increase this year, but then succumbed to the sell-off in riskier assets. The Fed begins a two-day policy meeting later in the global day, and investors will be anxious for any hints on the timing and pace of rate hikes, as well as about how fast the central bank will shrink its more-than $8 trillion holdings of Treasuries and mortgage debt.
Dollar and Yen support persist ahead of the FED monetary policy decision tomorrow. Stats from the Eurozone and the U.S may do little to distract the markets.