US Dollars Momentum Supported By Fed Interest Rate Hiking Road Map (EUR/USD, USD/CAD), UK & Europe Could Already Be In A Recession (EUR/GBP)

Merchandise World Trade To Grow 1.2% YoY, ING Economics Expects

Summary:

  • EUR/USD is close to 20 years lows.
  • The UK and the Eurozone may have already entered recession in the third quarter of the year.
  • Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020.

US Dollar remains supported

The market is reflecting bearish signals for this currency pair. A day after the Federal Reserve approved another sizable hike and promised to keep tightening monetary policy firmly in order to control inflation, the EUR/USD lacked confidence on Thursday, fluctuating between tiny gains and losses. This is probably due to rising U.S. Treasury yields. The exchange rate is very close to one of its lowest points in more than 20 years, having fallen dramatically from the overnight session high of 0.9907 and trading mostly flat on the day at 0.9843.

The Fed's hawkish roadmap, which anticipates 150 basis points of additional tightening up to the terminal rate of 4.6% in 2023, as well as its commitment to maintaining a restrictive stance for an extended period of time, should keep U.S. rates biased to the upside and support the dollar's momentum in the FX market.

US Dollars Momentum Supported By Fed Interest Rate Hiking Road Map (EUR/USD, USD/CAD), UK & Europe Could Already Be In A Recession (EUR/GBP) - 1 EUR/USD Price Chart

Europe & the UK may have already entered recession

The market is reflecting bullish signals for this currency pair. According to analyst and economist readings of the data, the latest round of S&P Global PMI Surveys of the manufacturing and services sectors revealed on Friday that the economies of the UK and the Eurozone may have already entered recession in the third quarter of the year.

Energy markets and developments in Ukraine, where Russian occupation troops are anticipated to be strengthened following substantial recent setbacks for the invading army at the hands of Ukrainian forces, also attracted attention in Europe.

US Dollars Momentum Supported By Fed Interest Rate Hiking Road Map (EUR/USD, USD/CAD), UK & Europe Could Already Be In A Recession (EUR/GBP) - 2 EUR/GBP Price Chart

USD/CAD

The market is reflecting bullish signals for this currency pair. This week, during another turbulent time for risky assets, the Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020; however, updated BMO Capital Markets forecasts suggest that it may be due for one of the most significant recoveries if and when the dollar reaches its peak.

The Canadian Dollar lost ground to the Swiss Franc on Friday as it dropped close to 73 cents versus the U.S. Dollar, but it still made significant gains over other currencies, several of which hit new multi-decade lows against the U.S. unit.

US Dollars Momentum Supported By Fed Interest Rate Hiking Road Map (EUR/USD, USD/CAD), UK & Europe Could Already Be In A Recession (EUR/GBP) - 3 USD/CAD Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Merchandise World Trade To Grow 1.2% YoY, ING Economics Expects

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.