News & Analysis

In September, the euro underperformed against peers as a combination of supply-chain disruptions, rising energy prices and climbing bond yields spiralled into an inflationary shock and downgrades in eurozone growth outlooks. This weighed on the single currency, along with German election uncertainty and lower real rate differentials, while broader market sentiment also deteriorated as these developments weighed on global growth expectations too. The US dollar meanwhile grew stronger amid this inflationary backdrop as investors took refuge in safe havens excluding JPY – due to the Bank of Japan’s monetary policy regime, the Japanese yen was weighed down by widening rate differentials along with the euro. While September’s losses were significant at over 2%, we expect the pressure on the euro to ease over the coming months as supply pressures mitigate, which should help to cool inflation and aid growth conditions. We expect the combination of these developments to be supportive for EURUSD, however we have downgraded our forecasts throughout the entire forecast horizon to show a more contained rally and account for the recent developments in markets.

Read Monex’s latest EUR Update here:

DOWNLOAD THE FULL REPORT

 

Author: Ima Sammani, FX Market Analyst

 

 

Disclaimer
This information has been prepared by Monex Europe Limited, an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Europe Limited or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.