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FX: EUR/USD - Euro Trades Just Above Parity With The USD.

London, Tuesday, 19 July 2022

In the third week of July, the euro exchanged hands at about 20-year lows of $1.02, slightly above parity with the dollar.

This movement was mostly driven by a declining dollar as investors reduced their bets on Fed interest rate hikes. Last week, the euro slipped under the crucial $1 mark amid worries that the energy crisis will plunge Europe into a deep recession and make it harder for the ECB to tighten monetary policy.

Until July 21st, when the main pipeline is scheduled to finish seasonal maintenance, natural gas flows through Nord Stream 1 will remain blocked.

The ECB is anticipated to increase policy rates by 25 basis points on Thursday, marking the first increase in more than ten years.

However, as inflation picks up steam, odds for a larger 50 basis point increase have recently increased.

The US Federal Reserve is expected to raise interest rates by another 75 basis points this month, for a total increase of 150 basis points since March.

(Source: Tradereconomics // Report and edit by: The Decision Maker - Finance editors)

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