September 1, 2021

Apparently This Is What Supports The Strengthening Of The Euro!

 Euro trade continued to hold on to gains from the weakness of the US dollar and higher -than -expected European Zone inflation data readings.

Data on Tuesday showed European Zone inflation rose to 3% year -on -year in August, exceeding the central bank’s 2% target and being the highest reading ever recorded in 10 years.

The surge in bond yields forced investors to move back to recovering the euro and pushed it to a nearly one -month high against the greenback as well as re -trading above 1.1800.

Following the rise, it makes investors look forward to the European Central Bank (ECB) policy meeting next week and expect policymakers to signal policy changes.

Robert Holzmann, governor of Austria’s central bank, said the ECB was now in a situation where it could consider reducing emergency bond purchases and he hoped the issue would be discussed at next week’s meeting.

Meanwhile, the president of the Dutch central bank, Klaas Knot, said the level of inflation in the European Zone had risen to a level that required an immediate drop for stimulus.

However, at the same time, there are also investors who believe that the ECB will continue to maintain its current monetary policy approach based on previous central bank guidelines indicating asset purchases will continue until a rate hike is needed.

At the time of writing, the euro is up slightly at 1.18150 against the greenback dollar, not far from the nearly one -month high it reached on Tuesday.