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Euro US Dollar Exchange Rate Climbs on ECB President’s Hawkish Comments

Euro US Dollar Exchange Rate Rises in Response to Lagarde’s Hawkish Remarks

The Euro US Dollar (EUR/USD) exchange rate is climbing to multi-week highs this morning in response to hawkish comments from European Central Bank (ECB) President, Christine Lagarde. Meanwhile, the US Dollar (USD) is subdued as USD investors await a speech from Federal Reserve Chair Jerome Powell. 

At the time of writing, the EUR/USD exchange rate is trading at around $1.07.

Euro (EUR) Boosted by Lagarde’s Hawkish Position

The Euro (EUR) is rising against the US Dollar today as the single currency continues to draw support from some hawkish comments from ECB President Lagarde on Monday.

Lagarde signalled the bank is open to raising interest rates at the upcoming meetings and aims ‘to be in a position to exit negative interest rates by the end of the third quarter.’

Furthermore, the Euro is buoyed as the Eurozone’s economy remains robust during May, despite slowing more than predicted.

The Eurozone’s services PMI eased from 57.7 to 56.3, missing market forecasts of 57.5 as growth in the sector was suppressed by the Ukraine crisis, supply constraints and rising prices.

Moreover, the Eurozone’s manufacturing PMI slipped from 55.5, missing market forecasts of 54.9 and printing at 54.4.

Commenting on the PMI data, releases, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

‘The Eurozone economy retained encouragingly resilient growth in May, as a beleaguered manufacturing sector was offset by a buoyant service sector.

‘Thanks to buoyant demand for services, particularly from households, the PMI data are consistent with the economy growing at a solid quarterly rate of 0.6% so far in the second quarter.’

This is likely to continue underpinning EUR exchange rates for the remainder of today’s session.

US Dollar (USD) Stumbles as Investors Await Powell’s Speech

The US Dollar is trading lower against the Euro today as USD investors await Fed Chair Jerome Powell’s speech.

At the Fed’s latest policy meeting, Powell appeared hesitant to hike interest rates by 75-basis-points at the upcoming June and July meetings.

Thus, some USD investors remain hesitant to place aggressive bets prior to Powell’s speech this evening. Should Powell signal that the bank is prepared to accelerate its tightening cycle, it may bolster demand for the ‘Greenback’.

Meanwhile, the US Dollar’s losses are being capped by fresh global recession fears. This comes as large parts of China remain in lockdown.

The lockdowns have curtailed Chinese export growth in recent months. As a result, concerns of a global economic downturn are driving investors towards the safe haven US Dollar.

Euro US Dollar Forecast: FOMC Meeting Minutes Take Centre Stage

Looking ahead, the Euro US Dollar exchange rate is also likely to be influenced by the publication of the Federal Open Committee (FOMC) meeting minutes.

Their release on Wednesday may shed more light on the Fed’s interest rate plans. Will a hawkish tone support the US Dollar?

Later today, the Euro may be impacted by a speech from ECB’s Lagarde. Should Lagarde maintain a hawkish position, it may underpin EUR exchange rates.