ECB Meeting: No Right Choices For The Euro
XM Group | Mar 08, 2022 10:16AM ET
ECB in a pickle
The crisis in Ukraine has produced another crisis for European monetary policy. Energy and food prices have stormed higher, which will probably propel inflation higher as well. Derivatives traders are already betting that inflationary forces will stick around for longer.
On the other hand, economic growth will take a serious hit. European consumers will get squeezed as a bigger percentage of their income gets spent on necessities. There’s also the banking sector to consider. Several large European banks have high exposure to Russian assets, which have suffered a dramatic devaluation.
On the upside, if there is a ceasefire in Ukraine soon or the ECB ends its asset purchases, the pair could edge higher towards the 1.1020 region.
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