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Weekly Roundup: Euro falls as ECB signals an end to interest rate hikes 

Amy Richards September 18th 2023 - < 1 minute read

The euro faced headwinds early last week after the European Commission downgraded the Eurozone’s GDP forecast, although EUR’s negative correlation with USD cushioned the single currency.  

Mixed German data then pressured the euro again on Tuesday. While overall economic sentiment in Europe’s largest economy improved, morale around Germany’s current conditions plunged to a three-year low. 

EUR was then flat until the European Central Bank decision on Thursday. Although the bank hiked, it signalled that interest rates may have peaked, with the euro slumping in response. 

At the end of the week, the single currency managed to claw back some losses as investors bought the dip. However, EUR remained down on the week. 

ECB bets could continue to impact the euro this week, with the Eurozone’s final inflation rate followed by speeches from multiple ECB policymakers. Any fresh hints that the bank is done raising rates could weigh on EUR. 

On Friday, the Eurozone’s September PMIs are due out. Could a deepening contraction in private sector activity see the euro fall even further? 

Written by
Amy Richards

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