The EURUSD currency pair was trading down over 20 pips as the dollar rallied against the single currency to end the week much lower than the previous one. On the weekly chart, we can see that the currency pair just bounced off a significant resistance zone and headed lower.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
The currency pair ignored comments by ECB policymaker Joachim Nagel, who also doubles up as the Bundesbank Chief, that the latest rate hike would not be the last. Nagel said, “Current data did not indicate that the ECB should change its thinking on the need for further rate hikes. We need to be sure that the latest inflation wave ends.”
Top Broker Recommendation
- eToro Top stock trading platform with 0% commission – Read our Review
- Tickmill Regulated by the FCA – Read our Review
- Admirals (Admiral Markets) More than 4500 stocks & ETFs available – Read our Review
- Spreadex Spreadex has been around for a long time – Read our Review
- IG Top-tier regulation – Read our Review
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
The euro’s overall weakness was also attributed to the lack of major news releases from the eurozone today, unlike other countries such as the UK, which had many economic releases that boosted the Sterling pound against the US dollar.
Analysts at Commerzbank also reiterated a bearish outlook on the euro, saying that any bullish trend witnessed in the single currency would not hold over the long term given the region’s weak fundamentals compared to other countries and regions.
According to a note issued by the analysts, “Even if the ECB (as our ECB watcher expects) will only raise its key rate once more (in June), the EUR is likely to appreciate in the second half of the year if (as we expect) it becomes foreseeable that the Fed will cut its key rate, but the ECB will remain rock-solid on its ‘terminal rate’. In the long run, however, EUR strength is unlikely to be sustainable.”
The Commerzbank economists added: “The ECB is likely to succeed in controlling inflation to a lesser extent than the Fed in the long term. Regardless of which of the two central banks offers the highest real interest rate on its respective currency, this will likely result in the Euro suffering from an increased inflation risk premium.”
The EURUSD’s weakness can also be attributed to the dollar’s overall strength as tracked by the US Dollar Index, which was rising for the second day at the time of writing.
*This is not investment advice.
The EURUSD price chart.
The EURUSD currency pair was trading down 23.0 pips (0.21%) as the dollar rallied against the euro.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.