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Weekly roundup: Euro revived by hopes for a negotiated end to Ukraine crisis

currency-newsWeekly roundup: Euro revived by hopes for a negotiated end to Ukraine crisis
The euro opened last week on the back foot, with the single currency tumbling to new multi-year lows amidst fresh concerns European energy supplies could be disrupted. This came amidst reports the US and EU were mulling a potential ban on Russia oil exports.

EUR exchange rates quickly bounced back after the EU opted not to follow the US in imposing a blanket ban on Russian oil.

This uptrend in the euro was then extended through the middle of the week as a temporary ceasefire in Ukraine bolstered hopes for a possible diplomatic solution to the war.

The European Central Bank’s (ECB) latest policy statement then gave the single currency another leg up on Thursday. The bank surprised markets by announcing plans to wind down its asset purchasing programme (APP) earlier than expected, which fuelled expectations the bank could start raising interest rates in October.

However these gains were tempered by subsequent comments from ECB President Christine Lagarde in which she stated any increase in interest rates following the end of the APP would be ‘gradual’.

The euro then gave up some ground again at the end of the week after peace talks between Russia and Ukraine's foreign ministers ended in an impasse.

Looking ahead, fresh hopes for a negotiated end to the war in Ukraine could help to bolster the euro this week, with Ukraine officials suggesting progress could be made in a ‘matter of days’.

Otherwise the focus for EUR investors looks to be on the latest ZEW survey from Germany, which could place some significant pressure on the euro amidst forecasts for a sharp deterioration in economic sentiment this month.
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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