Euro price, news and analysis
- As I predicted here last week, there was little shatter for the Soviets at last week’s meeting of the European Central Bank’s Policy-Making Council. EUR / USD consequently, it had changed little, while there was even a large slide EUR / GBP.
- Nevertheless, the tightening of monetary policy in the euro area is approaching closer, which means that stronger-than-expected activity or inflation rates are likely to boost growth. Euro if weaker-than-expected data weaken it.
The price of the euro rose higher
With the September meeting of the Governing Council behind us, euro traders are increasingly turning their attention to the next meeting on 28 October and, more importantly, to the meeting on 16 December. This is because the December meeting in particular now has a live sense that it could end in a decline in central bank support for the euro area economy.
As I wrote here, EUR /GBP is in a good position to rally next week and 0.86 is an obvious target if Wednesday ‘s UK inflation data is weaker than forecast. However, EUR /USD may also become more robust as the year progresses, with stronger-than-expected actions or inflation data confirming the view that tighter monetary policy in the euro area is on track and all weaker-than-expected numbers have been sidelined.
As the two-hour chart below shows, the EUR / USD has risen since August 20, and now there is little progress to 1.19, which is not only a round number, but also marks a week ago — assuming, of course, that suddenly no safe haven is moved. US dollar should risk sentiment being sour.
EUR / USD price chart, two-hour schedule (August 19-September 10, 2021)
Source: IG (Click for larger image)
The problem this week is that there are actually very few data points for the euro to respond to; just eurozone industrial production on wednesday july, trade on thursday august and final inflation on friday august.
Nevertheless, the ECB has now revised its 2022 inflation target and “recalibrated” its pandemic emergency purchase program., is the most likely upward trend for the euro, especially if the ECB ‘s hawks continue to operate sooner rather than later.
– Written by Martin Essex, analyst
Feel free to contact me Twitter @MartinSEssex