Eurozone Economy Confront Threats of COVID-19 Resurgence

In Eurozone, the prospect of COVID-19-related lockdowns has reared its ugly head once more. Experts warn that they might drive the continent’s economy into a tailspin. Some observers are concerned that the Austrian government’s decision to enforce a complete lockdown across the country last week could extend across the continent.

Last week, the euro lost a lot of ground and ended up being the weakest performer. It’s first been dragged down by ECB officials’ dovish statements, which downplayed the necessity for policy measures to combat inflation. Worries increased even more after Austria was placed under full lockdown.

A New COVID infection is seen every day. In Austria, 19 infections have reached the 15k mark, up from less than 10k in the initial wave in November of last year. In Austria, daily deaths have risen to more than 50. Germany, which has a daily infection rate of roughly 60k compared to 30k in previous peaks, is feared to be next. Technically and structurally, the Euro faces significant downside risks in the near future.

In other currency markets, the Australian Dollar was the second-weakest currency, followed by the Swiss Franc. The pound was the most valuable currency, as robust inflation data fueled anticipation of an eventual Bank of England rate hike. The dollar was the second strongest currency, but the yen regained some ground as risk markets became more unsettled.

The Eurozone PMIs Are in the Spotlight in the New Week

As the euro is being savaged in the currency markets, the flash PMI statistics for the Eurozone will likely draw a lot of attention when they are issued at 09:00 GMT on Tuesday. The euro’s pain stems primarily from expectations that the European Central Bank will lag behind other central banks in normalizing monetary policy. However, recent fears about the Eurozone economy have caused investors to become even more concerned about the outlook.

This year, the Eurozone economy has made significant progress toward full recovery from the epidemic, with GDP forecast to regain lost output by the end of the year. While widespread supply shortages and rising energy prices are definitely having an impact across Europe, particularly in Germany’s enormous auto industry, no one is predicting a recession, at least not yet.

This year, the Eurozone economy has made significant progress toward full recovery from the epidemic, with GDP forecast to regain lost output by the end of the year. While widespread supply shortages and rising energy prices are definitely having an impact across Europe, particularly in Germany’s enormous auto industry, no one is predicting a recession, at least not yet.