Forex: Euro Rises Well Above $1.05 | 05/17/22

New York (dpa-AFX) – The Euro rose significantly on Tuesday. In US trade, investors paid $1.0523. The European Central Bank had previously set a reference rate at $1.0541 (Mon: 1.0422), so the dollar would have cost 0.9487 (0.9595) euros.

The euro in general supported the friendly mood in the financial markets. The world’s leading currency, the dollar, was less in demand. The prospect of fewer coronavirus restrictions in China offered some hope. No new infections were reported in the economic city of Shanghai for the third consecutive day. Strict restrictions cause supply chain problems all over the world. European economies such as Germany are particularly dependent on international trade.

Since the beginning of the week, the euro has recovered somewhat from its sharp losses in recent weeks. A few days ago, the common currency hit a five-year low of $1.0350. The main reason is the appreciation of the dollar, which has been benefiting for some time from the latest interest rate increases and the possibility that key interest rates will continue to rise significantly.

However, the Euro is now also receiving a tailwind from rising interest rate expectations. On Tuesday, the European Central Bank was expected to raise interest rates by a total of one percentage point in money markets this year. Expectations have risen step by step over the past few weeks. The background is high inflation, which is well above the ECB target. / jsl/he/ajx/he