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Weekly Roundup: Euro hits parity with the US dollar

currency-newsWeekly Roundup: Euro hits parity with the US dollar
The big story last week was the euro’s move to parity with the US dollar, which suppressed EUR sentiment through much of the session.

The start of the week saw the euro also faced pressure as the Nord Stream 1 gas pipeline between Russia and Germany was shut off for annual maintenance, with analysts fearing the shut off could be permanent.

Also pressuring EUR exchange rates in the first half of the week was a dramatic slump in German economic sentiment.

After slumping to parity against the US dollar in the middle of the week, the euro then rebounded in the latter half of the session as the pairing’s negative correlation saw the single currency strengthen as USD exchange rates weakened.

However, this recovery was kept in check by concerns over the political situation in Italy after Mario Draghi resigned as prime minister.

In the spotlight this week will be the European Central Bank’s (ECB) latest interest rate decision, in which the bank is set to deliver its first rate hike in over a decade.

The ECB has previously stated it will start its tightening cycle with a modest 25bps hike, but in light of soaring Eurozone inflation and an increasingly aggressive Federal Reserve, this may be seen as being inadequate by EUR investors. Potentially leading to losses unless the bank is particularly hawkish in its forward guidance.

Also influencing EUR exchange rates will be the Eurozone’s latest PMI figures. Will another slowdown in the bloc’s private sector pile more pressure on the Euro?
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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