Published on 19.10.2022 15:55

The Euro has received a boost in today’s trading session against the US dollar after a strong round of data out of the Eurozone boosted the case for further rate hikes from the ECB

The ZEW Economic Sentiment Index in the Euro Area improved slightly to -59.7 in October, up from -60.7 September, while Europe’s biggest economy saw a rise in investor morale. The Indicator of Economic Sentiment for Germany rose to -59.2 in October 2022 from the previous month's 14-year low of -61.9 while the current conditions subindex slumped to -72.2 from -60.5.

Following the most recent CPI print the European Central Bank has a raft of options and today’s improving ZEW numbers may serve to strengthen the ECBs case for a continuation of rate hikes toward its 2% target. The fear with further rate hikes is that the central bank runs the risk of pushing the economy back into the doldrums with recessionary signs visible in the declining ZEW current conditions release. On the flip side, a lack of action by the central bank could see the Euro come under further pressure against the US dollar.

Looking further ahead today, the main drivers of the Euro/USD currency pair will be the release of the Monthly Budget Statement released by the Financial Management Service summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD.

Market participants will also keep a close eye on any developments on the war between Ukraine and Russia which has once again flared up again today after once again, the Russian side attacked Kyiv, the Ukraine capital with Iranian made drones


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