Key points:
- The EURUSD pair was trading up 17 pips, having recouped earlier losses.
- The euro was edging higher as the dollar weakened against its peers.
- Investors are looking forward to next week’s ECB rate decision.
The EURUSD currency pair was trading up 17 pips at writing, recouping its earlier losses against the dollar and hoping to end the day in positive territory. However, the pair’s weekly performance has not been impressive, as it was up 0.18% for the week at writing.
Investors look forward to next week’s European Central Bank (ECB) Governing Council monetary policy meeting. Many expect the bank to hike interest rates by 75 basis points even as inflation figures in the eurozone remain high.
Also read: Forex Market Lessons From 3 Day Traders.
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Earlier today, Reuters reported that Germany’s parliament was ready to vote on a €200 billion emergency rescue package initiated by the government to help the country fight the energy crisis triggered by the Russian invasion of Ukraine.
The German government has taken measures to prevent an energy crisis in the country, such as by nationalising Uniper, the largest energy company, via a €15 billion ($14.95 billion) rescue deal.
As Europe’s largest economy, Germany’s economy significantly impacts the region’s economic progress, and the massive spending package will likely filter through into the rest of the region. The move places the ECB in a challenging spot, given that it still has to fight inflation while at the same time allowing governments to spend more.
The ECB has developed a unique balancing strategy that was supposed to benefit countries with smaller economies. However, Germany’s latest move indicates that the strategy could benefit even larger economies that still need t spend more to cushion their citizens from the harsh impact of record-high energy prices.
The EURUSD currency pair is set to end the week in positive territory. Still, many expect a more significant move next week when the ECB announces its monetary policy decision, with many expecting the ECB to hike rates by 75 basis points.
*This is not investment advice.
EURUSD price chart.
The EURUSD currency pair was trading up 12 pips (0.12%) at writing, having recouped its earlier losses against the dollar.