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Weekly roundup: Euro weakened by ECB policy divergence

currency-newsWeekly roundup: Euro weakened by ECB policy divergence
The euro spent most of last week’s session on the defensive as a clear EUR selling bias emerged.

This appeared primarily driven by rising concerns over the growing divergence in monetary policy between the European Central Bank (ECB) and its peers.

Whilst most other major central banks have signalled plans to start tightening their monetary policy in the near-term, the ECB remains committed to maintaining its ultra-accommodating policy, a stance which is increasingly undermining the appeal of the euro.

Also exerting pressure on EUR exchange rates last week was the publication of some disappointing Eurozone data, with industrial production in the bloc contracting more than expected, whilst German economic sentiment plunged to its worst levels since the start of the coronavirus pandemic.

Whilst a pullback in the US dollar has offered some support to the euro at the start of this week, the single currency could face some pressure by the end of the session with the release of the Eurozone’s latest PMI figures.

These are forecast to report a slowing of growth in the bloc’s private sector this month and are likely to weigh on EUR sentiment.
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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