Why Has The Euro Suddenly Surged After A Lull?
The Euro hasn’t risen as much as it has recently, to a 1.6 percent showing the biggest ever jump since March. This has been seen as the biggest rise since March, as it continues to surge for more than six months.
One can blame this on the European Central Bank officials who have pushed for aggressive monetary tightening and the greenback (US dollar) seemed to have had no choice but to soften.
The Euro has risen to its highest since August 17. According to formal statements shared with the Reuters, “Positions are pretty stretched, everyone and his dog has been long dollar, and we had (ECB) comments over the weekend, which are very hawkish and that fed this perception that maybe the market is overdone,” said Jane Foley, head of FX strategy at Rabobank.
Bundesbank President Joachim Nagel told German radio over the weekend that if the picture for consumer prices doesn’t change “further clear steps must follow.”
There is an insecurity amongst the ECB policymakers that they run the risk of raising their key interest rates to 2 percent, more so to curb record inflation in the euro zone.
Investors are being prompted to move away from the dollar as of now, as US inflation is also rises. The euro’s strength was also seen against the pound and it rose as high as 87.22 pence on Monday, its highest since February 2021.
The greenback’s weakness on the day meant sterling gained 0.8% on the dollar to $1.1678 and hit its highest level this month early in London trading, marking a small recovery from last week’s 37-year low.
The dollar index, which measures the currency against six major counterparts, was down 0.67% at 108.25 down from a two-decade peak of 110.79 reached on Wednesday.