Things are not looking good for the Euro as it continues to struggle to stay afloat despite all that is happening in the major currency space. The dollar has been the main focus within the Fed, but the euro is stealing the show a bit today as it falls further across the board. If that’s not a worrying signal, I don’t know what else to take away from the euro’s inability to take off.
While most major currencies are seeing a modest push against the Dollar, the Euro has struggled to break above the 50.0 Fib retracement level at 1.0283. In fact, the single currency has struggled to even challenge that level and there hasn’t been much optimism following the ECB’s policy decision last week.
Economic data and sentiment continue to deteriorate and today’s economic confidence reading fell to 17-month lows.
Galloping inflation, a central bank that only tends to go into recession, an impending gas crisis before winter, and the worst? There doesn’t seem to be much relief on all fronts, even as we dig into the second half of the year. Sure, supply chain issues have eased slightly and energy prices have come down, but the continued Russian-Ukrainian conflict just ensures that there are more isolated issues than there are. common solutions for the euro area for the time being.
Germany is about to face a severe gas crisis and a recession in Europe’s largest economy seems more than likely at the moment. Meanwhile, Italy is facing political upheaval and giving the ECB more trouble to do its job – in which policymakers have already been rather slow in trying to deal with inflationary pressures.
It’s hard to see positives for the euro when the fundamental outlook is so dire. EUR/JPY is also now approaching its 100-day moving average at a two-week low at 137.67 while EUR/CHF is drooling lower and threatening to pull back towards 0.9700 after the breakout of parity.
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