**Common currency trades at level not seen since April 2017 on expectations of slower tightening**
The euro has tumbled to a five-year low against the US dollar as investors bet the European Central Bank will struggle to match the pace of monetary tightening across the Atlantic, particularly as the war in Ukraine casts a shadow over the bloc’s economic recovery.
The European common currency fell further on Wednesday morning after hitting its weakest point since April 2017 late in the previous New York session, according to Refinitiv data. It has declined steadily since early February as traders responded to increasingly hawkish signals from the Federal Reserve, which is expected to raise interest rates rapidly as it fights soaring inflation.
While markets have also begun to price in an end to ultra-loose monetary policy in the eurozone, the ECB is expected to tread carefully, given the threat to the region’s economy from soaring energy prices that could worsen if the bloc decides to place sanctions on Russian oil and gas exports.
This week, a rush to the safety of the dollar amid concerns about the resurgence of coronavirus in China has pushed the euro beneath the lows it plumbed at the height of the pandemic to levels not seen since April 2017.
“The market is convinced that the Fed will be more aggressive than the ECB under pretty much any scenario,” said Athanasios Vamvakidis, head of foreign exchange strategy at Bank of America. “I think we are seeing a long overdue capitulation from investors who had been reluctant to go short [the euro against the dollar].”
Despite notching up new lows against the dollar, the euro has fared better against many other major currencies. The euro is up against the Japanese yen, the British pound and the Swedish krona so far in 2022.
That broader buoyancy suggests there is room for the euro to decline further, including against the dollar, according to Vamvakidis.
“It’s maybe early to talk about parity [with the dollar],” he said. “But if we think about what else could go wrong for the euro, then I think with sanctions on Russian energy we could indeed get there.”
Euro hits five year low against many currencies, not just dollar.
> The euro is up against the Japanese yen, the British pound and the Swedish krona so far in 2022.
All doing very poorly at the moment.
ECB, what is going on with you? Don’t you see the writing on the wall? The inflation will not stop unless you start doing something.
We should swap Lagarde (head of ECB) with Russian head of central bank, Nabiullina. The latter is way more competent and Lagarde can cripple Russian economy instead. Win-win.
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**Common currency trades at level not seen since April 2017 on expectations of slower tightening**
The euro has tumbled to a five-year low against the US dollar as investors bet the European Central Bank will struggle to match the pace of monetary tightening across the Atlantic, particularly as the war in Ukraine casts a shadow over the bloc’s economic recovery.
The European common currency fell further on Wednesday morning after hitting its weakest point since April 2017 late in the previous New York session, according to Refinitiv data. It has declined steadily since early February as traders responded to increasingly hawkish signals from the Federal Reserve, which is expected to raise interest rates rapidly as it fights soaring inflation.
While markets have also begun to price in an end to ultra-loose monetary policy in the eurozone, the ECB is expected to tread carefully, given the threat to the region’s economy from soaring energy prices that could worsen if the bloc decides to place sanctions on Russian oil and gas exports.
This week, a rush to the safety of the dollar amid concerns about the resurgence of coronavirus in China has pushed the euro beneath the lows it plumbed at the height of the pandemic to levels not seen since April 2017.
“The market is convinced that the Fed will be more aggressive than the ECB under pretty much any scenario,” said Athanasios Vamvakidis, head of foreign exchange strategy at Bank of America. “I think we are seeing a long overdue capitulation from investors who had been reluctant to go short [the euro against the dollar].”
Despite notching up new lows against the dollar, the euro has fared better against many other major currencies. The euro is up against the Japanese yen, the British pound and the Swedish krona so far in 2022.
That broader buoyancy suggests there is room for the euro to decline further, including against the dollar, according to Vamvakidis.
“It’s maybe early to talk about parity [with the dollar],” he said. “But if we think about what else could go wrong for the euro, then I think with sanctions on Russian energy we could indeed get there.”
Euro hits five year low against many currencies, not just dollar.
> The euro is up against the Japanese yen, the British pound and the Swedish krona so far in 2022.
All doing very poorly at the moment.
ECB, what is going on with you? Don’t you see the writing on the wall? The inflation will not stop unless you start doing something.
We should swap Lagarde (head of ECB) with Russian head of central bank, Nabiullina. The latter is way more competent and Lagarde can cripple Russian economy instead. Win-win.
Yet the dollar is inflating like crazy