The Euro continues to languish against the US dollar in today’s trading session after several speeches by Central bank heads painted different attitudes towards tightening monetary policy which includes reducing stimulus programs created on the back of the covid 19 pandemic.
ECB President Christine Lagarde noted in a speech yesterday that inflation expectations are not expected to remain high for any length of time and added that the EU still needs an accommodative monetary policy stance which basically means there will be no interest rate hikes or reduction in fiscal support in the Eurozone for quite some time
“The key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term. What we are seeing now is mostly a phase of temporary inflation linked to reopening,” (reopening of the economy after the worst of the coronavirus) Lagarde noted.
On the other hand, in a separate speech to the US congress later in the day, US Federal Reserve Boss Jerome Powell noted that inflation is more of worry than earlier this year, and the US economy has met most of the conditions for the Fed to begin tapering, which means a reduction in their bond buying program and probably an interest rate hike somewhere down the line.
Mr Powell is due to continue his speech later today during the American session and any further talk of a reduction in stimulus by the US Central bank chief is only going to create more headaches for the Euro.
The EUR/USD currency pair has fallen again during the course of the trading session on Today and now sits around the region of $1.1669 after coming very close yesterday to hitting a one year low
The currency pair may see a bit of a bounce from that level, but quite frankly, the Euro that has been grinding lower, due to the fact that the US dollar has been strengthening overall and if we break below the yearly low of $1.1663 the Euro is likely to make its way towards the $1.1600 handle before travelling towards the $1.1500 level after that.