The Euro weakened lower on Friday after European Central Bank officials sent mixed policy signals. On the other hand, the expectation of a rate hike of 50 basis points from the Federal Reserve has pushed the US dollar to a new 25 -month high.
ECB President Christine Lagarde displayed a dovish tone by stating the central bank may need to cut its growth projections. The statement came after a day ECB dove Luis de Guindos along with several policymakers called for an early termination of the bank’s asset purchase scheme and a rate hike in July.
The mixed signal contrasts with a clear message coming from Fed Chairman Jerome Powell on Thursday that a half-point interest rate hike is almost certain when the U.S. central bank. met on 3-4 May.
According to market analyst Moritz Paysen noted that in order to convince the market in the long run, all members of the ECB need to be unanimous. The review of monetary policy is a key subject for the currency market as interest rates influence the relative performance of currencies.
The Euro initially recorded a strengthening yesterday until Lagarde’s comments made the indications increasingly mixed. So this has pushed the Euro depreciation by 0.09% to 1.0821 against the US dollar.
Investors are now paying close attention to the French elections that will take place this Sunday. Recent polls show Emmanuel Macron dominating by 55%.
Sterling fell against the dollar to its lowest level since November 2020 after recent Bank of England sales data and reviews signaled a possible slowdown in monetary policy tightening.
