Published on 13.02.2023 11:31

The Euro is once again under pressure against the US dollar as we get ready to enter today’s European trading session, following on from Friday’s heavy losses and according to one analyst unless the Eurozone's energy crisis can be fully solved the European currency may find it difficult to put together any meaningful rally.

According to Kit Juckes, who is Global Head of Foreign Exchange Strategy at Société Générale, the Euro's recent recovery against the greenback has been driven to a great extent on beliefs that the Eurozone has passed the peak of its energy crisis and lower prices would spur economic growth.

although the main issue with energy security have passed, constant supplies remain an issue and especially since there seems to be no end in sight for the war between |Ukraine and Russia,

"The euro may consolidate unless European confidence improves. And the key to that may be the extent to which consumers and economies are confident that the energy crisis is behind us. Economic agents will not easily ignore Europe's dependency on imported, and in particular Russian energy. said Mr Juckes.

Looking further ahead, a quiet day today is expected for the EUR/USD due to the lack of economic news and market participants will await tomorrows release of key consumer price index figures from the US.

Inflation in the US has been sliding for the past three months supported by lower energy costs among other things and has fallen from an eye watering figure of 9.1%, all the way down to 6.5% and analysts expect the figure to hit 5.8% tomorrow and the core inflation that excludes oil and food prices to come in at 5.4% vs. last month’s figure of 5.8%.

If we go on the latest nonfarm payrolls report, which came in nearly 3 times higher than analysts had predicted, it might be wise to refrain from placing any bets against the US dollar until after the release of the news.


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