The euro slumped on Thursday following the European Central Bank’s (ECB) latest interest rate decision.
However, the single currency found its gains limited by a drop in eurozone investor confidence, which hit a two-year low.
EUR struggled in a narrow range as the week went on. Although Germany’s ZEW economic sentiment index unexpectedly increased, it remained near its lowest levels since the Covid pandemic struck in March.
Some hawkish comments from European Central Bank (ECB) policymakers may have boosted the euro, if energy security fears hadn’t offset the upside. Ukraine cut some Russian gas supplies to Europe, saying that the Russian military was interfering with pipelines.
These fears worsened towards the end of the week, causing EUR to tumble. After Finland signalled its intention to join Nato, Russia threatened to retaliate. This development spooked investors, who feared that the conflict could escalate.
A 1.8% decline in eurozone industrial production further added to the single currency’s downside at the end of the week.
The euro has risen so far this week, despite an unexpected widening of the eurozone’s trade deficit. The upside may have come as exports hit an all-time high, despite imports also breaking records.
For the remainder of the week, high-impact economic data is fairly sparse. As a result, developments from the Russia-Ukraine crisis could drive EUR movement.
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)