The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
The single currency then extended its downtrend through the week, in response to a series of dovish comments from European Central Bank (ECB) policymakers.
Remarks from ECB President Christine Lagarde were particularly damaging to the appeal of the euro, as she poured cold water on any suggestion the ECB could hike rates in 2022, by warning a premature tightening of the bank’s monetary policy would ‘cause far more harm than it would do any good’.
EUR exchange rates then came under additional pressure at the end of the week following the announcement that Austria would be reimposing lockdown measures amidst a record surge in daily Covid cases.
Turning to this week, stronger-than-expected Eurozone PMI releases look to extend some support to the single currency at the start of the week.
However, fears that more European countries could follow Austria in imposing a full lockdown are simultaneously weighing on the euro. EUR investors are particularly worried about the potential for stricter restrictions in Germany as it also faces record case numbers.
Expect the euro to plummet if a major Eurozone nation such as Germany or France is forced to announce new lockdown measures.
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)