The euro weakened against the US dollar, trading near its lowest level in two weeks. This decline is primarily attributed to a stronger dollar following hawkish signals from the Federal Reserve and uncertainty surrounding leadership within the European Central Bank (ECB). Investors are also monitoring geopolitical tensions, which further bolster the dollar’s safe-haven appeal.
- The euro traded near $1.18, its weakest level since February 5.
- US dollar strengthened due to hawkish signals from the Federal Reserve.
- FOMC minutes suggested policymakers are divided on the rate outlook.
- Christine Lagarde may step down early as head of the ECB.
- Francois Villeroy de Galhau, governor of the Bank of France, is set to step down in June.
- ECB is widely expected to keep interest rates unchanged for the remainder of the year.
- EUR/USD struggles to hold above 1.1800.
- Geopolitical tensions exacerbate the USD safe-haven condition.
- EU published December Current Account surplus of €14.6 billion.
The current environment presents a challenging outlook. A strong US dollar, fueled by potentially tighter monetary policy and geopolitical uncertainty, is weighing heavily. Leadership transitions within the ECB and Bank of France introduce further uncertainty, which adds pressure in the market. The expectation of unchanged interest rates for the remainder of the year from the ECB offers little support in the near term.