EUR/USD: Euro Under Pressure As U.S. Dollar Gains
NAGA | Jun 30, 2022 09:54AM ET
The EUR/USD continues to see strong declines for a third consecutive day. The US Dollar has regained the value lost over ten days within three days. The price of the EUR/USD has declined by 0.53% today and by 1.92% over the past three trading days.
The Euro has been declining against the US Dollar but also against most competitors over the past 24 hours. This week, the US Dollar index has also increased in value. Currently, the price of the exchange rate has declined below previous support levels and has also managed to form 3 impulse price swings in favor of the US Dollar.
The US Dollar is strongly influenced by the financial picture and the market's risk appetite. It is known to be a haven asset. We can see that the price of Bitcoin has declined by 5.26%, and the S&P 500 has also declined by 1.53% before today’s market has even opened. Risk-based assets have taken a significant hit as traders look to less risky assets.
The low-risk appetite and “risk-off” market sentiment have increased demand for the US Dollar. In addition, the Dollar is also influenced by hawkish comments made by banking officials. The Federal Reserve has become more hawkish over the past few days, indicating that a 75 basis point is possible instead of a 50 basis point.
In the first quarter of this year, the US GDP declined by 1.6%, slightly higher than expected. However, as this has not resulted in a decline in inflation or the employment sectors, it is predicted that the Fed will continue rate hikes.
The Euro was pressured by comments made by the Central Bank and the lower inflation figures confirmed yesterday for Germany. The German Consumer Price Index was predicted to increase by 0.4% but was confirmed as 0.1%, which is the lowest in 9 months. This also shows that the level of demand in the Eurozone may not be as high as expected.
The European Central Bank advised that its actions must consider two problems simultaneously. The first is the level of inflation and the second is the risk of recession. Experts suggested that the expected rate hike would be short-term, after which the department will take a break to assess the economy's condition.
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