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Weekly roundup: Euro plunges amid Ukraine concerns

currency-newsWeekly roundup: Euro plunges amid Ukraine concerns
The euro plummeted to new multi-year lows last week as EUR investors were spooked by the war between Russia and Ukraine and the potential knock-on impact on the Eurozone economy.

EUR investors were particularly concerned about the potential for Russia to retaliate against the ratcheting up of sanctions from Western powers by disrupting European energy supplies.

Underpinning the EUR selling bias was a further scaling back of European Central Bank (ECB) rate hike expectations.

The general consensus now appears to be that the bank will avoid raising interest rates in 2022, in spite of the Eurozone’s latest consumer price index reporting inflation in the bloc rocketed to a record high of 5.8% in February. 

The EUR sell off then intensified at the end of last week following reports of a fire breaking out at Ukraine’s largest nuclear power plant amidst an assault from Russian troops. The news triggered concerns over European security and caused the EUR/USD exchange rate to plunge below the key $1.10 barrier for the first-time since the start of the Covid-19 pandemic.

Turning to this week’s session it seems safe to assume the situation in Ukraine will continue to drive movement in the euro.

This is likely to see the EUR selling bias remain firmly entrenched, particularly amidst reports the US and EU are considering a ban on Russian oil exports in a move which could disrupt European energy supplies.

The ECB is also set to conclude its latest interest rate decision later this week. This could pile even more pressure on the euro if the bank reverts to a more dovish outlook in light of the war in Eastern Europe.
 
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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