Recent Activities In Eurozone Cause Euro To Pump While Dollar Price Slips

On Tuesday, the trading price of the dollar experienced a pull against the trading price of the euro. The dollar has been losing ground against the trading prices of the major currencies lately.

Now, the euro is among the currencies that are gaining strong ground against the dollar. The situation for the eurozone is constantly becoming more and more supportive.

On the other hand, the situation is taking a negative turn when it comes to the US. This is the reason why the trading value of the USD is constantly losing ground against all major currencies.

The business activity in the eurozone has picked up the pace and it has recorded modest growth. Even the running month is showing promising figures, which shows that the European economy is making a comeback.

With these factors going in favor of the euro, its price is ought to get pushed higher in the upcoming days.

While business activity has been on the rise in the eurozone, the situation is exactly the opposite for the United States. The data shows that for the seventh month straight, a shrink has been recorded in business activity.

Business Activity in the US

The data shows that a constant decline is being witnessed in business activity in the United States and the trend has continued in January as well.

The report shows that the moderation of the downturn in terms of business activity has been witnessed in the services and the manufacturing sectors.

Since September 2022, it is for the first time moderation has been recorded in particular sectors. As for the business confidence, it seems to have been pushed higher as the New Year seems to have strengthened that.

The Monex USA director of trading, Juan Perez, recently shared his thoughts about the data being shared by the Feds.

He stated that the data that has been shown goes to show that the Feds are trying to preach resilience to the economy.

They want to preach that the economy of the country is strong enough to take on further interest rate hikes.

Feds’ Plans for Interest Rate Hikes

Despite the constant hikes, the Feds have not had a full as they still want to increase the interest rates. According to the Feds, they will be surging the interest rates by around 5% and they aim to do it by June 2023.

This gives the Feds two-quarters of interest rate hikes. Throughout the period, the Feds may continue hiking the interest rates by 25 bps as well as 50 bps.

However, the Feds have dropped a hint that they may introduce a few 75 bps interest rate hikes until June 2023.

After June, they will start cutting down on the interest rates to make things better for the public. The activity of interest rate cuts will take place in the second half of 2023.

According to the economists, the Feds have attempted to prevent expansion, which is clear by looking at the PMIs. The most surprising thing is that the economy has not taken much of an impact, which is quite promising.

The dollar did not find a Strong Ground

Despite the recent developments involving the US economy, the situation has not been well for the dollar. The growth and the developments have failed to reflect on the US dollar’s trading price in the market.

Although the dollar did gain some strength against the euro, it ended up losing to the growing momentum of the euro.

The value of the dollar kept on plummeting and on that particular day, it was close to hitting a 9-month low against the trading price of the euro.

The trading price of the euro gained 0.9% strength against the trading price of the dollar, moving up to $1.0881. In the process, the euro managed to come closer to a 9-month high against the dollar at $1.0927.