Dollar loses participation: the ECB puts pressure on the euro

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The fall in the dollar is the most relevant news on this trading day, limited by the closure of many Asian exchanges. The euro is gaining ground with an ECB determined to raise rates.

He ate asian markets Limited by the closure of many Stock Exchanges for the Lunar New Year, the dollar is the protagonist of this financial week.

Specifically, the Dollar has weakened against most of its counterparts, while Japanese equities have rallied and European futures are higher.

The focus, on this day of weak trade and with China paralyzed by the holidays, is on the foreign exchange market and, above all, on the effect that central banks are having on the euro-dollar exchange rate. The single currency is recovering, driven by a AEC which seems more aggressive in its rate policy than the Fed.

Effect of central banks on markets: weak dollar

The couple EUR/USD exchange rates at 1.0901 at approximately 8.20, highlighting a single currency boost and vice versa a weakening dollar.

In detail, theEUR maintains the upper hand against the US Dollar at the start of the week, boosted by hawkish comments from AEC and general weakness of the US currency.

Eurotower Board Member Klaas Knot said on Sunday: “Expect us to hike rates by 0.5% in February and March, not done until then, with further steps to follow in May and June”.

His colleague Olli Rehn noted that he sees significant reasons for this. “gods of ascension interest rate by the ECB this winter and next spring.”.

Meanwhile, the latest Reuters poll of economists showed most expect the ECB’s deposit rate to peak at 3.25% in the second quarter of this year, up from estimates of 2.75% a month ago.

Hawkish expectations from the European central bank, combined with big bets on a slowdown in the pace of Federal Reserveare helping to reduce the monetary policy divergence between the two central banks, in turn driving the pair higher EUR/USD.

also the American dollar remains hampered by the advance of Japanese stock exchanges and by the positive closing Wall Street last Friday, which slows down the purchase of the dollar as a safe haven asset.

Source: Money It

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