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Monthly Wrap: Euro riding high as US dollar struggles

currency-newsMonthly Wrap: Euro riding high as US dollar struggles
Key takeaways:
  • Euro higher on US dollar weakness
  • EUR/USD hits 2 ½ year high  
  • EUR Monthly lows: £0.87, $1.13, AU$1.44, NZ$1.55, C$1.44
  • EUR Monthly highs: £0.89, $1.18, AU$1.50, NZ$1.58, C$1.48  
The euro was definitely one of July’s currency winners in terms of displays of strength.

The common currency was able to surge to a 2 ½ year high against the US dollar in July and remain in the region of an 8-month high against the pound.

So what were the main causes of the euro’s gains? Well, the European Central Bank (ECB) set a rocket under EUR with its latest interest rate decision, while the currency also benefited from broad-based weakness in the US dollar. 

Although the ECB decision didn’t contain any surprises in terms of immediate adjustments to monetary policy, hints that it would begin discussing tapering quantitative easing in the autumn were enough to send the euro soaring.

Meanwhile, the US dollar softened across the board after the latest Federal Reserve announcement reduced the odds of a third rate hike taking place in 2017 by stressing policymakers’ concerns about the low level of domestic inflation. President Donald Trump’s failure to implement any of his planned tax or spending reforms were also responsible for USD weakness.

In the weeks ahead any reports which support the ECB’s intention to begin winding down QE will be euro-supportive, but the common currency could move away from its best levels on any indications that the Eurozone economy isn’t strong enough to withstand a reduction in stimulus.

News from the US will also be key, with further dramas in the White House having the potential to keep the US dollar depressed and, by extension, euro exchange rates elevated.  
Currencies Direct

Currencies Direct

Currencies Direct is one of Europe's leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we've maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering "business to business" solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.

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