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Weekly roundup: Euro pressured by USD strength

currency-newsWeekly roundup: Euro pressured by USD strength
The euro spent much of last week on the defensive, as a strengthening of the US dollar weighed heavily on the US dollar as a result of the strong negative correlation between the world’s most traded currency pairing.

The downside in EUR exchange rates came despite the publication of some positive German economic releases throughout the week, with the country's latest retail sales and factory orders figures beating expectations.

The euro found some fleeting gains in mid-week trade on the back of comments from European Central Bank (ECB) governing council member Mārtiņš Kazāks, who suggested the bank could start hiking interest rates from 2023 if its inflation outlook changes.

However the single currency was then able to mount a more convincing recovery at the very end of the week. This rebound was supported by both a pullback in the US dollar as well as the publication of the Eurozone’s latest inflation figures.

December’s preliminary figures reported inflation in the bloc unexpectedly accelerated to a record high of 5%, appearing to contradict the ECB’s narrative that the recent spike in inflation is ‘transitory’.

Turing to this week, the primary focus for EUR investors is likely to be on Germany’s full-year GDP release.

Market participants will be eager to see just how much the emergence of Omicron and the resulting restrictions impacted the Eurozone's largest economy at the end of the year, with the euro likely to weaken if growth misses expectations.
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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