Euro Stays Afloat $1.11 Mark; ECB Awaited

Published on Jul 27, 2023 10:37

Euro is staying subdued against the dollar on Thursday despite a pull back in the greenback after the Fed said that it has decided to raise the target range for the federal funds rate by 25 basis points to 5.25 to 5.50 percent. Investors are probably guessing that Federal rate hikes are nearing its peak. With yesterday`s hike, Fed midpoint of the target range is the highest since early 2001. The central bank said it remains highly attentive to inflation risks and reiterated it is strongly committed to returning inflation to its 2 percent objective. The dollar index that measures the greenback against a basket of currencies hit 101.19 in the previous session but eased thereafter to be currently quoting at 100.59. However, euro is unable to gain much traction although it continues to stay above $1.11 levels. The pair is staying on the side lines ahead of today`s upcoming ECB monetary statement. EURUSD is quoting at $1.1134. Meanwhile, on the NSE, EURINR August futures are staying firm at 91.17, up 0.12% on the day.

Euro has been on a downhill recently amid tepid economic outlook. The IMF noted yesterday that growth in the euro area is projected to fall from 3.5 percent in 2022 to 0.9 percent in 2023, before rising to 1.5 percent in 2024. The forecast is broadly unchanged, but with a change in composition for 2023. Given stronger services and tourism, growth has been revised upward by 0.4 percentage point for Italy and by 1.0 percentage point for Spain. However, for Germany, weakness in manufacturing output and economic contraction in the first quarter of 2023 means that growth has been revised downward by 0.2 percentage point, to -0.3 percent.