- The US Dollar continues to rally in the wake of the U.S CPI report.
- GBP is likely to see currency value weaken in the future.
- Market participants expect to see some strength in the EUR.
- Is the AUD starting to lose momentum?
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The US Dollar continues to strengthen against the EUR
The market is signalling bearish market sentiment for the EUR/USD currency pair. During early trading on Thursday the US Dollar strengthened to a two-decade high after U.S inflation remained high. The U.S CPI report revealed that although inflation could likely have reached its peak, it is still high and the Fed’s current aggressive tightening of monetary policy is likely to remain aggressive. This is causing the US Dollar to strengthen even further against the EURO.
EUR/USD Price Chart
Pound Sterling is likely to continue to weaken.
The market sentiment for this currency pair is showing bullish signals. However, during early trading on Thursday the price of this currency pair has lost value. Going forward it is likely that the market will see a Pound Sterling that continues to weaken in the wake of rising prices and inflation. The combination of a government unwilling to help and an inflation-weary UK public are two factors that will contribute to the further weakening of the GBP.
In addition, it is expected that the Pound Sterling is likely to fall further against the Euro and USD as the economic outlook in the UK deteriorates and prompts the Bank of England (BoE) to ease the rising interest rates.
EUR/GBP Price Chart
EUR expected to strengthen against CHF
The market sentiment for this currency pair is showing bullish signals. Investors expect the EUR to strengthen against the CHF. Market participants expect the European Central Bank (ECB) to raise interest rates for the first time in more than 10 years in the summer. Whilst the Swiss National Bank (SNB) remains dovish in their fight against inflation.
EUR/CHF Price Chart
NZD strengthens slightly against the AUD
After the National Australia Bank (NAB) increased their interest rates early in May, the AUD/NZD currency pair increased in value. The momentum for this move has somewhat slowed since then. However, the pair still seems to be showing volatility.
AUD/NZD Price Chart
Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com