Published on 27.10.2022 11:56

The Euro powered through the parity mark against the US dollar in yesterday’s trading session once again breaking down the psychological barrier and as we enter today’s trading session the European currency is taking a breather as market participants await a string of important news from both the US and the Eurozone.

To kick off, we will see the latest interest rate decision from the European Central Bank where they are expected to deliver another bumper rate hike to help reign in inflation which is sitting at record levels in the Eurozone and is threatening to push the whole region into a recession.

With a 75-basis point rate hike already priced into the market the Euro’s fortunes may be tied to the following monetary statement by ECB president Christine Lagarde who will lay out the ECB’s future movements and should include guidance on any further rate rises this year’

There is growing consensus of having the deposit rate at 2% by the end of the year, which means we should expect a 50-basis point hike in December, with a reassessment of the economic and inflation outlook in early 2023 regarding future movements.

“The ECB will likely raise its three policy rates by 75 basis points and suggest that it will go further at its next few policy meetings without providing a clear guidance on the size and number of steps to come,” said. Holger Schmieding, chief economist at Berenberg.

During the American session investors will await US GDP figures to hit the market and according to the projections, the US economy has expanded by a margin of 2.4% in the third quarter against last month’s figure of 0.6%. A figure below expectations may help the Euro continue yesterday’s rally.

Apart from that, investors will also focus on the US Durable Goods Orders data which is expected to come in at 0.6% against last month’s figure of minus 0.2 percent and will have a marked impact on the EUR/USD currency pair should the numbers come in above or below consensus.


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