Euro reaches five-year low

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So far during the 20th week of 2022, the exchange rate of the single European currency, the euro (EUR) and the US dollar (USD) currency pair reached US$ 1.0349 per EUR, which corresponds with the short-term values of this currency pair in 2017. From the latest development of trading of this currency pair, based on technical analysis data, the area of support of the EUR/USD exchange rate is currently ranging from US$ 1.0340 to 1.0350 per EUR and the exchange rate parity of both currencies has not occurred yet.

On 17 May 2022, at 7:18 am CET, the EUR/USD currency pair traded on the international foreign exchange – Forex market at US$ 1.0444 per EUR, with the daily strengthening of the EUR by +0.12% against the USD. According to the US Dollar Currency index (DXY) this mutual exchange rate was achieved in a situation where the global position of the USD showed a slight decline in its exchange value against other major world currencies. Also, according to this index, we saw the USD at a price level of 104.16 with the current daily decrease of -0.03%.

The EUR within the global currency pair EUR/USD currently appreciates due to the weaker USD and the risk-taking mood for this currency, prolonging the previous rebound from a five-year low. However, the cautious investor sentiment prior the release of macroeconomic data, along with the upcoming events in relation to the Ukrainian – Russian conflict, has recently only been tested by buyers of this currency pair. According to the Federal Reserve System (Fed) the recovery in the market sentiment could be related to China’s headlines regarding Covid, as well as the recent worsening of the US economy. At the same time, Shanghai announced plans to end Covid-related lockdowns after the third day of consecutive zero coronavirus cases outside the quarantine area.

However, it is worth noting that China State Planner’s latest comments, which, according to Reuters, point to increasing downward pressure on the economy, call into question market optimism and the strength of the USD, from which the EUR profited from. In this context, analysts and financial strategists such as Lee Sue Ann and Quek Ser Leang, FX strategists of the UOB Group, noted that the likelihood of this pair breaking below the mutual exchange rate US$ 1.0340 per EUR is low. However, according to these Forex market experts, it is still clear that the pressure on the euro is growing and the US dollar is likely to rise again next week, so reaching the parity of both currencies cannot be ruled out.

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