On Thursday (June 30), the EURUSD opened at 1.0440 and closed at 1.0442 yesterday. As of now, the highest has touched 1.0447 and the lowest has been 1.0435. Temporarily reported 1.0438, down 0.04%. The British pound was temporarily reported at 1.2192, an increase of 0.07%; the Canadian dollar was temporarily reported at 0.7753, an increase of 0.02%.
On June 29, Bank of America Merrill Lynch said in a report that the euro will struggle to gain support as the European Central Bank struggles to come up with the necessary tools to curb interest rate differentials in peripheral countries as it seeks to raise interest rates. The euro will struggle to find support for the rest of 2022 as the European Central Bank struggles to come up with the tools necessary to rein in spreads in the periphery as it seeks to raise interest rates.
The euro was last down 0.74% at $1.044. The European Central Bank is widely expected to follow its global peers in raising interest rates for the first time in a decade in July, as soaring inflation cools, though economists are divided on the magnitude of the hike. That makes investors nervous. European Central Bank President Christine Lagarde said on Wednesday that the pre-pandemic era of ultra-low inflation was unlikely to return and that the central bank needed to adapt to sharply higher price growth expectations.
Athanasios Vamvakidis, global head of foreign exchange strategy at Bank of America Merrill Lynch, said: “The dovish ECB and the periphery are keeping the euro weak.
The analyst said the ECB is at the heart of the euro’s inability to achieve a sustained recovery, as it will struggle to keep pace with major countries in raising interest rates and reversing quantitative easing .
“We think the ECB is likely to remain dovish relative to most of the rest of the G10 until they address the split risks,” Vamvakidis said. When the ECB raises rates, it will inevitably see weaker countries pay Yields on debt (bonds) rose faster than yields in “financially strong” countries such as Germany and France.