Please try another search
The euro jumped out of the gates on Monday with sharp gains. In the European session, EUR/USD was trading at 1.0673, up 1.12% on the day.
The euro looked hopelessly lost earlier this month, when it dropped to 1.0349, its lowest level since January 2017. There was increasing speculation that the euro was heading to parity with the US dollar.
EUR/USD has rebounded back in impressive style, gaining 1.42% last week and extending the rally today. However, the upswing will be difficult to sustain above the 1.07 line, as the euro’s rally is more a story of US dollar weakness rather than euro strength.
The dollar has fallen out of favor as fears of a US recession are weighing on sentiment towards the U.S. currency. US yields were above the lofty 3% threshold just two weeks ago, but nervous investors have snapped up US Treasury bonds, sending yields lower. In turn, the US dollar has also retreated.
Despite the euro’s turnaround, the medium and long-term picture is bearish for the currency. The ECB remains in dovish mode, and upcoming Fed rate hikes will widen the US/Europe rate differential and weigh on the US dollar.
The ECB might raise rates in July, but will clearly lag behind an aggressive Fed, which is likely to deliver 50-bps hikes at the July and August meetings.
The euro faces a persistent headwind coming out of Ukraine, as the war between Russia and Ukraine continues. Heavy fighting has been reported in the east of the country, and a ceasefire, let alone an end to the fighting, appears unlikely anytime soon.
That means oil and wheat prices will remain elevated, contributing to high global inflation and weighing on risk appetite, which is bearish for the euro.
EUR/USD Technical
GBP/USD is approaching a key support level ahead of the Fed and BoE meetings. The BoE is very unlikely to consider rate cuts before the Fed and the ECB. Meanwhile, Fed's hawkish...
The Australian dollar is sharply lower on Tuesday. In the European session, AUD/USD is trading at 0.6507, down 0.80%. The Aussie is on a nasty slide and has declined by 1.7% since...
GBPUSD generates fresh 2024 peakBut declines sharply towards the 50-day SMAMomentum indicators weaken significantlGBPUSD has been stuck in a rangebound pattern since mid-November,...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.