Euro US Dollar (EUR/USD) Exchange Rate Drops as Putin Commits Further Troops
The Euro US Dollar (EUR/USD) exchange rate is falling today. A ramping up of Russia’s military efforts is likely weighing on the currency pair. Expectations of a bumper rate hike from the Fed may also be pushing EUR/USD lower.
At time of writing the EUR/USD exchange rate is at around €0.9922, which is down roughly 0.5% from this morning’s opening figures.
Euro (EUR) Tumbles as Russia Announces ‘Partial Mobilization’
The Euro (EUR) is slumping against its peers today. US Dollar (USD) demand may be reducing interest in the single currency. EUR may also be seeing losses after the Russia’s announcement that it will be committing to a ‘partial mobilization’ in Ukraine.
Russian President Vladimir Putin announced on Wednesday that the country would be calling up around 300,000 reservists. Putin also heightened his rhetoric surrounding the country’s use of nuclear weapons.
On the other hand, the Euro could see its losses curbed by comments from European Central Bank (ECB) President Christine Lagarde. Speaking on Tuesday, Lagarde signaled that the ECB may need to raise rates further to tame soaring inflation.
US Dollar (USD) Ticks Higher ahead of Fed Interest Rate Decision
The US Dollar (USD) is ticking higher today ahead of the Federal Reserve’s interest rate decision. Bets may also be limited by a swift pullback in Treasury bond yields.
The Fed is expect to commit to a 0.75% interest rate hike. Markets have largely priced in the move, although there is some speculation of a 1% rate hike.
Ed Yardeni, president and chief investment strategist of Yardeni Research, said:
‘I do think they’re going to come around and conclude that maybe just get it over with, maybe 100 basis points instead of 75 basis points. And then maybe one more hike after that.’
The currency may also be buoyed by a risk-off mood amid global recession fears.
EUR/USD Exchange Rate Forecast: Will Fed Hike Rates by 0.75% as Forecast?
Looking ahead for the Euro, the ECB’s economic bulletin on Thursday could prompt movement in EUR. Investors will be looking for any hints of the central bank’s pace of policy tightening.
Also on Thursday, EUR could slip amid a forecast further fall in the trading bloc’s consumer confidence.
The single currency could see further losses if Friday’s PMI figures print as forecast. Performance across German and Eurozone private sectors is expected to slip further.
For the US Dollar, the Fed’s interest rate decision on Wednesday evening could see the currency leap. Markets have largely priced in the move however, meaning that the impact could be minimal.
On Friday, a slip in September’s private sector growth could curb gains for USD. The US services sector is forecast to remain in decline.
Finally on Friday, a speech from Jerome Powell could underpin any losses for the currency if he remains hawkish.
