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Weekly Roundup: Euro strengthens amid energy price pullback and ECB expectations

currency-newsWeekly Roundup: Euro strengthens amid energy price pullback and ECB expectations
The euro gained ground early last week amid a decline in European gas prices. Part of the fall in energy markets came as the EU said it would stage an ‘emergency intervention’ to tackle the energy crisis, which risks pushing the Eurozone into a recession.

However, a larger-than-expected fall in eurozone economic sentiment may have capped EUR’s gains.

On Wednesday, Eurozone inflation exceeded forecasts to hit a record high of 9.1%. This prompted expectations of a jumbo rate rise at the European Central Bank’s (ECB) meeting this week, thereby boosting the single currency.

EUR’s upside was curtailed, however, following a report from Fitch Ratings predicting a full cut-off of Russian gas supplies and a subsequent eurozone recession.

Nevertheless, the euro remained buoyed by falling gas prices, although warnings that Russia could further disrupt supplies prevented further gains.

This week, the euro is under pressure as energy prices soar again, fuelled by Gazprom’s decision to indefinitely halt gas supplies via the Nord Stream 1 pipeline. Gas price dynamics will likely continue affect EUR exchange rates through this week and beyond.

The single most impactful event for the euro this week will be the ECB interest rate decision. If the bank opts for a steeper 75-bp hike, the single currency could gain ground.
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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