Euro Bounces Off The Magic Number

By Capital.com (David Jones)Market OverviewJul 15, 2022 11:04AM ET

www.investing.com/analysis/euro-bounces-off-the-magic-number-200627173

Euro Bounces Off The Magic Number

By Capital.com (David Jones) | Jul 15, 2022 11:04AM ET

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EUR/USD

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There is a “groundhog day” feeling to financial markets as the same issue continues to concern investors - resulting in similar moves in certain markets. Of course, the latest inflation data on Wednesday saw the figure hit another 40-year+ high in the US. US dollar continues to benefit from this cloud hanging over the world economy, which hit multi-year, and multi-decade highs.

In foreign exchange, the euro falling to parity with the US dollar was grabbing headlines - one euro is now only worth one dollar. That is a fall for the euro of 15% over the past 12 months. And there is a double-whammy here for the Eurozone economy as a weaker euro makes imports more expensive - and this all helps fan the flames of inflation.

Round numbers such as the parity situation we have with EUR/USD can make traders think that perhaps this is where major trends will turn. That certainly can’t be ruled out - but let’s not forget that in the first couple of years of this century, the euro was still lower, hitting 0.83 in October 2000. For now, at least the US dollar remains a favorite amongst investors providing at least some safe-haven insulation from the woes affecting most major economies worldwide.

Stock markets were also heavily hit by the latest inflation data. The S&P 500 had been enjoying a gentle recovery over the past three weeks but got knocked back to the lows for the month so far as the news broke. It still looks too early to call the absolute bottom for stocks after a challenging year for investors - the S&P is down 12%, and the NASDAQ is off by more than 20%.

At the moment, it does not look like all of the bad news about inflation is being discounted into the price, judging by the nerves seen on the latest announcement - investors are probably braced for more volatility in stocks throughout the summer.

Disclaimer: This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are of the authors, not necessarily that of Capital.com or any of its affiliates, subsidiaries, officers, or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Past performance is no guarantee of future results.

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Central Banks

Interest Rates

Next Meeting

FED

4.50%

Feb 01, 2023

ECB

2.50%

Feb 02, 2023

BOE

3.50%

Feb 02, 2023

SNB

1.00%

Mar 23, 2023

RBA

3.10%

Feb 07, 2023

BOC

4.50%

Mar 08, 2023

RBNZ

4.25%

Feb 22, 2023

BOJ

-0.10%

Mar 10, 2023

CBR

7.50%

Feb 10, 2023

RBI

6.25%

Feb 08, 2023

PBOC

3.65%

BCB

13.75%

Feb 01, 2023

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Euro Bounces Off The Magic Number

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