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Weekly roundup: Euro undermined by Russia tensions

currency-newsWeekly roundup: Euro undermined by Russia tensions
The euro trended broadly lower last week as the single currency was undermined by fears of potential conflict breaking out on Europe’s doorstep, as Russia continued to build up its military forces along its border with Ukraine.

EUR investors grew increasingly unnerved as hastily arranged talks between the US and Russia ended without any progress.

Elsewhere, the euro’s strong negative correlation with the US dollar left the single currency on the defensive at the start of the week amidst a sharp appreciation of USD exchange rates.

European Central Bank (ECB) President Christine Lagarde also talked down the euro last week as she further stoked concerns over ECB policy divergence after suggesting ‘there are no reasons for us to act in the same way as the US Federal Reserve’ in raising interest rates.

Despite this the single currency was able to rally in the latter half of the week amidst a market correction.

Turning to this week, the euro looks to face some pressure at the start of the session after the Eurozone’s latest PMI release revealed Omicron restrictions in place throughout most of the bloc lead to private sector growth slowing to an 11-month low in January.

Also influencing EUR exchange rates this week will be the publication of Germany’s latest IFO business climate index on Tuesday. Will a rebound in business confidence this month offer some support to the euro?
 
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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