Published on 30.05.2022 11:16

The Euro has performed exceptionally well over the last 2 weeks against the US dollar US Dollar jumping more than climbed 1.7% over that time period, which marks its biggest gains against the American currency since the start of the year

The greenback has actually been declining against most of the major currencies for the last 2 weeks as it seems as if the US Federal Reserve has begun taking a more optimistic approach with regards to aggressive interest rate hikes, and especially in the 2nd half of the year over fears they may push the US economy into a recession.

The Fed are widely expected to deliver two 50 basis point interest rate hikes at their next 2 board meetings but the odds of a 50-basis point hike in September have been dwindling as they try to find a balance between reigning in inflation and derailing the economic recovery currently underway.

The European Central Bank has been doing the opposite of the Fed and this past week, ECB Governing Council member Martins Kazaks said that the central bank should not rule out half-point rate hikes. Similar commentary was also heard from Governing Council member Robert Holzmann and even ECB president Christine Lagarde has called for rate hikes which was unthinkable up until a month ago.

Looking at the week ahead, there is a range of economic data which may shape the Euro’s fortunes as the year unfolds and dictate whether the European currency can continue its recent uptrend.

 On Monday we will see the release of consumer confidence figures from the Eurozone as a whole followed by Consumer price index figures from Germany which are expected to hit the market at a healthy 8%.

On Tuesday the market will await consumer confidence figures from the US followed up on Wednesday by retail sales figures from Germany and ISM manufacturing figures from the US.

On Thursday we will see key employment data from the US with the release of the ADP employment figures and initial jobless claims numbers from the US followed up on Friday by retail sales figures from the Eurozone and probably the most important news of the week, the nonfarm payrolls figures from the US.


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