EUR/USD: Price Continues its Decline Ahead of EU CPI SHORT 🔔

EUR/USD NEWS AND ANALYSIS

ECB members reiterate the same message – leaving the euro susceptible
We take a closer look at key support levels for the free-falling EUR/USD
Main risk events for the week ahead

ECB MEMBERS REITERATE THE SAME MESSAGE – LEAVES EURO SUSCEPTIBLE

The ECB’s Centeno and de Guindos join Schnabel, Villeroy and Nagel in call for rate hikes to start after the ECB puts an end to bond purchases. The constant reiteration of the ECB’s stance further supports euro depreciation against the dollar, in light of the fact that the Fed is only just getting started on its rate hiking cycle despite already reaching 1% on the upper bound. This afternoon we see a number of ECB and Fed speakers with Nagel and Schnabel as well as Mester and Kashkari in the public eye.

Major central banks like the Fed, Bank of England (BoE) and Bank of Canada (BoC) have been perceived by some as having taken too long to tighten monetary policy in the wake of surging inflation which reflects poorly on the euro as the European Central Bank (ECB) is yet to achieve lift-off. Current guidance states that the first rate hike in the bloc is due to take place early in Q3 with the 21st of July meeting identified as a convenient opportunity to do so. Rates markets agree that July will welcome the first rate hike as the July expectations currently factor in a 25 basis point hike. Between now and then, the Fed is estimated to hike another 50 basis points in June.