Home Daily Commentaries USD hovering over a 9-month low against EUR

USD hovering over a 9-month low against EUR

Daily Currency Update

The US dollar hovered near a 9-month low against the euro as traders weighed the risks of a US recession and the path for Federal Reserve policy. Money market traders see only two more 25 basis point rate hikes by the Fed to a peak of around 5% by June, with two 25 basis point cuts following before year-end. The Fed has insisted 75 basis points of more tightening is likely on the way.

By contrast, Europe’s single currency has been buoyed by comments from European Central Bank officials pointing to further aggressive policy tightening.

Key Movers

Yesterday, the euro has been supported by comments from European Central Bank governing council members Klaas Knot and Peter Kazimir, who both advocate for two more 50 basis point hikes at meetings in February and March.

The ECB will keep raising interest rates quickly to slow inflation which remains far too high, ECB President Christine Lagarde said on Monday, mainly repeating the bank’s most recent policy guidance.

Focus today will be on reports from the EU, UK, and US, where services & manufacturing PMI data will be released.

Expected Ranges

  • GBP/USD: 1.2385 - 1.2465 ▲
  • GBP/EUR: 1.1365 - 1.1435 ▲
  • EUR/USD: 1.0875 - 1.0945 ▲