The Euro, the world’s second most traded currency, has dropped to its lowest level versus the US dollar since May 2020.
Indeed, the Euro lost about 10% of its value against the US dollar last year. Market participants blamed the European Central Bank’s dovish stance (ECB). Interest rates will hike when the net asset acquisitions complete, which some believe will be too sluggish.
On the other hand, the Russian Ruble depreciated only by 8% against the dollar, which is an unusual turn of events. Especially given that Finbold reported in March that the Ruble risk remains below levels seen in previous currency crises. The Euro fell due to ECB tightening, with market investors expecting that the deposit rate would reach zero by the end of the year. According to the ECB’s perspective, the war in Ukraine is posing inflationary concerns in the Eurozone.
The positive steepening of the Euro currency curve appears to indicate that the ECB is not in a hurry to tighten monetary policy. Also, Christine Legard, President of the European Central Bank, has warned that the ECB will not respond forcefully to inflationary pressures.
The Australian dollar is heavily associated with commodity markets, so keep an eye on it if global demand becomes a huge issue. Inflation is also a concern, as the Federal Reserve’s hawkish stance raises the value of the US currency. The market is attempting to break down from here and favor the greenback, and it appears that we are on the verge of approaching the 50-day EMA. The 50-day EMA is soon coming. Therefore that will be the next significant stumbling block.
Keep in mind that the market is currently facing several challenges, and, understandably, the Australian dollar is underperforming. After all, global growth is susceptible to risk appetite. In the end, the market is more likely to sink than grow. The 0.75 level should remain a bit of a ceiling.
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