Weekly Roundup: Euro undermined by USD correlation
Amy Richards July 24th 2023 - < 1 minute read
The euro also saw a mixed start to the week, initially finding modest support thanks to its negative trading relationship with a weaker US dollar before wobbling lower as USD recovered.
Midweek, an upward revision to the Eurozone’s final core inflation rate gave EUR a lift by boosting European Central Bank (ECB) rate hike bets.
However, an ongoing recovery in the US dollar maintained pressure on the single currency throughout the week, keeping a lid on EUR exchange rates.
Even better-than-forecast Eurozone consumer confidence failed to lift the common currency.
The euro was able to rise against its riskier peers on Friday, though, thanks to a souring market mood.
So far this week, the euro has come under considerable selling pressure. As with the pound, dire PMI surveys are weighing heavily on the single currency.
The focus moving forward is on the ECB interest rate decision on Thursday. A 25bps increase is expected, but any signs that the bank may be at the end of its hiking cycle could see EUR slump.
On Friday, Germany’s latest inflation rate is scheduled for release. Signs of easing price pressures in the Eurozone’s largest economy could add to expectations that the ECB may soon stop raising interest rates.
Written by
Amy Richards