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EUR/USD to reach parity by the end of the week?

currency-newsEUR/USD to reach parity by the end of the week?
The US dollar roared higher on Monday, bolstered by Federal Reserve rate hike bets and a gloomy market mood.

The pound, meanwhile, is trading on the defensive this morning, with GBP/EUR subdued at €1.1830 and GBP/USD slumping to $1.1843. GBP/CAD is muted at C$1.5442, while GBP/AUD and GBP/NZD dip to AU$1.7632 and NZ$1.9393, respectively.

Coming up will a slump in German economic sentiment push the euro lower this morning?

What’s been happening?

The US dollar shot out of the gates this week, the currency rallying on the back of aggressive Fed rate hike bets on the expectation Friday’s stronger-than-expected payrolls figures points will reassure Fed policymakers that the US economy can withstand tighter monetary policy.

Reinforcing the US dollar’s gains were concerns over a rise in Covid cases in China, which stoked fears of new lockdowns being imposed in the world’s second largest economy.

The latest uptick in the US dollar brought the EUR/USD exchange rate close to parity, a level which analysts suggest is likely to be hit by the end of the week.

This was not helped by another downturn in the euro on Monday, with the single currency being pressured by concerns over Russian gas exports to Germany as annual maintenance work on the Nord Stream 1 pipeline began.

Meanwhile, the Pound struggled to attract support yesterday, Sterling sentiment being undermined by domestic political uncertainty and a prevailing risk-off mood.

What’s coming up?

In the spotlight today is the publication of Germany’s latest ZEW economic sentiment index.

July’s index is expected to report a sharp drop in investor morale this month as the outlook for the Eurozone’s largest economy grows increasingly bleak in the face of potential gas shortages and continued inflation.

In the UK political developments will remain a key focus, with the pound likely to remain subdued amid fears of a prolonged leadership race.

Finally, we are likely to see the US dollar extend its bullish run today so long as market sentiment remains downbeat.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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