Since the end of last week, the single European currency, the Euro (EUR), has seen its exchange rate fall, especially against the US dollar (USD). First, this currency pair traded at US$ 1.10 USD per EUR and then at the beginning of the new trading week, which is the 15th of 2022, the exchange rate fell below US$ 1.09 per EUR. According to analysts, without the intervention of the ECB (European Central Bank), there is a significant assumption that this decline will continue.
On 12 April 2022, at 7:31 am CET, the global currency pair EUR/USD traded at a mutual exchange rate of US$ 1.0877 per EUR with the current daily decline of EUR by -0.056% against the USD. This mutual exchange rate was achieved in a situation where, according to the US Dollar Currency Index (DXY), we saw the USD at the price level of 100.01 with the current daily strengthening of +0.08%. At the time mentioned, the EUR also weakened against other currencies.
According to economic correspondents, this outflow of interest in investing in the EUR and the associated decline in the exchange value of the EUR is primarily due to three basic factors. First of all, it is an indisputable fact that the change in the US Federal Reserve’s (Fed) monetary policy, in the form of raising interest rates, has significantly increased the USD exchange rate and many investors have turned to the USD. Secondly, the current inactive or waiting tactics of the eurozone central bank – European Central Bank – in relation to interest rates and the effort to stabilize and increase the exchange value of the EUR. So far, signals from the head of the ECB, Christine Lagarde, do not indicate that the Governing Council of the ECB will adjust the current zero interest rate any time soon, as almost all the world’s central banks have already done.
Last but not least, geopolitical events and economic issues such as the war in Ukraine and the associated refugee crisis in Europe, the uncertain outcome of the French presidential election, Hungary’s divergent attitude within the EU towards sanctions against the Russian Federation. There is also the threat of a social upheaval under the influence of significantly high inflation and extreme energy prices in the event of an embargo on Russian oil and gas supplies for the population of Europe and especially the central and eastern parts of the EU. According to analysts and financial strategists, all these primary aspects complete investor sentiment, where investors are discouraged from trading the EUR, except for speculators who are betting on a continuing decline in the EUR exchange rate, especially against the USD. In recent hours, there has been a lively debate, especially in the United States, as to whether the EUR will fall to parity or even below the USD for the first time in about two decades.