The euro strengthened one dollar before the ECB

The euro strengthened one dollar before the ECB

London (awp/afp) – The euro settled Thursday near parity with the dollar a few hours before the European Central Bank’s (ECB) monetary policy decision, with traders hesitating over the level of price increases that will be decided by the financial institution.

Around 9:10 am GMT (11:10 am CET), the euro lost 0.06% to 0.9999 dollars.

Given the record inflation, the ECB should accelerate the tightening of its monetary policy by deciding on a very high rate hike.

Observers are now leaning towards a 75 basis point increase, although the option of a 50 basis point increase is still on the table for some investors.

“There is a big risk of just 50 points due to the general caution of the board of governors” that the euro could have, warns Geoffrey Yu, an analyst at BNY Mellon.

“There probably won’t be a unanimous decision. In addition to the rate itself, communications from (ECB President) Christine Lagarde on the state of the economy and possible future increases will be closely scrutinized”, comments Matthew Ryan, an analyst at Ebury.

And the dollar remains supported by the strict monetary policy of the US Federal Reserve, and “there has been no change in tone from Fed officials if we stick to the message of Vice President Lael Brainard”, emphasizes Lee Hardman, MUFG analyst.

“So far, we have raised policy rates quickly to the peak of the last cycle, and policy rates will need to rise further,” he said in a speech on Wednesday.

“Monetary policy will have to be restrictive over time to provide assurance that inflation is close to the target,” added the powerful institute’s number two.

The yen (-0.20% to 144.03 yen) and the pound (-0.34% to 1.1494 dollars per pound) were nearing the lowest level in decades reached the previous day.

Thursday class Wednesday class


09:10 GMT 21:00 GMT

EUR/USD 0.9999 1.0006

EUR/JPY 144.02 143.82

EUR/CHF 0.9741 0.9772

EUR/GBP 0.8700 0.8676

USD/JPY 144.03 143.74

USD/CHF 0.9742 0.9767

GBP/USD 1.1494 1.1533