Home Daily Commentaries 9 month high for EUR/USD

9 month high for EUR/USD

Monday 23 January, 2023

Daily Currency Update

The euro rose on Monday reaching the highest level against the dollar since April 2022 as several European Central Bank officials signalled the bank will continue with its aggressive rate hikes. The US dollar has started Monday morning down against the euro and is looking at a fourth straight session of losses against the single currency as more optimistic comments on ECB interest rates compared with market pricing for a less aggressive Federal Reserve at their next rate interest decision meeting. European Central Bank member Klaas Knot said interest rates would rise by 50 basis points in both February and March and continue climbing in the months after. Klaas Knot is considered a hawk among policymakers and the comment was taken as pushback against recent reports that the ECB would scale back to 25 basis point moves from March.

Key Movers

The US Federal Reserve, which began raising rates many months before the ECB, is forecast to end its tightening cycle after a 25-basis point hike at each of its next two policy meetings. It is then expected to hold rates steady for at least the rest of the year, according to a recent Reuters poll.

Expected Ranges

  • GBP/USD: 1.2385 - 1.2465 ▲
  • GBP/EUR: 1.1305 - 1.1395 ▼
  • EUR/USD: 1.0895 - 1.0975 ▲