The euro fell during Wednesday's trading against the US dollar, deepening its losses for the fourth day in a row, recording the lowest level in five weeks, due to renewed fears of the continuation of the current gap in interest rates between Europe and the United States.
Comments from several European Central Bank monetary policymakers this week kept uncertainty about the timing of interest rate cuts, pending comments from Bank President Christine Lagarde later today.
On the other hand, the recent comments of some members of the Federal Reserve were more stringent than expected, which reduced the chances of cutting US interest rates next March.
Price view
Euro exchange rate today
The euro fell against the dollar by about 0.2% to ($1.0856), the lowest since last December 13, from the opening trading price of ($1.0875), and recorded the highest level at ($1.0884).
On Tuesday, the euro lost 0.7% against the dollar, the third daily loss in a row, and the largest daily loss since January 2, due to the acceleration of purchases of the American currency as the best available investment.
European comments
German Central Bank Governor Joachim Nagel, a hawkish member of the European Central Bank, said: It is too early to talk about interest rate cuts. Inflation is very high. We want to see more data. We will wait for the next monetary policy meeting and we will see.
European Central Bank Vice President Luis de Guindos said last week: Keeping interest rates high for a long enough period will help achieve the medium-term inflation target of 2%.
Christine Lagarde
By 15:15 GMT, European Central Bank President Christine Lagarde will speak at the World Economic Forum in Davos, where she is expected to address economic developments in the euro zone and the future of interest rates.
American interest
Federal Reserve Board member Christopher Waller said on Tuesday: While the United States is close to achieving the inflation target of 2% in the medium term, the US Federal Reserve should not rush towards interest cuts until it is sure that low inflation is sustainable.
Waller added: “I will need more information in the coming months to confirm or perhaps challenge the idea that inflation is moving sustainably towards our 2.0% target before supporting interest rate cuts.”
Following those more aggressive than expected comments, futures pricing on the odds of a US interest rate cut fell by about 25 basis points at the March 20 meeting from 75% to 65%.
Interest rate gap
The interest rate gap between Europe and the United States is currently at 100 basis points, the smallest gap since May 2022, and according to the recent development of possibilities, this gap is expected to continue until next May at least, which will put negative pressure on the euro’s exchange rate against the dollar. .
Artistic look
The Euro completes the negative pattern - Analysis - 01-17-2024
