Published on 21.04.2022 13:43

The Euro has broken back up through the $1.09 mark in today’s trading session after comments from various ECB board members firmly up the chances of a rate hike as we work towards the month of July

The latest voice from ECB Vice-President Luis de Guindos seems to be behind the latest move in the Euro after he said that the central bank sees neither stagflation nor a recession happening in the Euro Area and inflation will decline this year but stay above 4% in Q4.

This follows on from the bullish stance made yesterday by the governor of the Central Bank of Latvia, Martins Kazaks, Mr. de Guindos added that he sees no reason why the APP program should not be discontinued in July and that, theoretically, a rate hike in the same month is possible.

Financial markets are are now beginning to take notice in the change of stance from the European Central Bank and many analysts now see around 75 basis points worth of rate hikes this year, up around 10-12 basis points this week, as the ECB continues its battle with runaway inflation. The odds for rate hikes may push even higher after we see the release of Euro Area inflation in for March later in the day.

Apart from the inflation numbers from the Eurozone, the other drivers of the EUR/USD currency pair today will be the release the weekly Initial Jobless Claims and Philadelphia Fed Manufacturing Survey from the US and a good set of numbers may add to the urgency for the US Federal Reserve to deliver their next rate hike more quickly.

We will also see a monetary speech from ECB president Christine Lagarde and US Federal Reserve prsedint Jerome Powell when they appear at the  IMF-World Bank spring meetings in Washington.


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