Euro to Record Highest Monthly Rise in 2022 Amid Weaker Dollar

Updated:

The euro extended its losses in the London session on Tuesday but remained close to its highest point in the month as it moves towards closing its best year in 2022. This comes amid raging inflation data that could prompt the European Central Bank (ECB) to increase its lending rates.

In Germany, consumer prices increased by 8.7%, while inflation reports in Spain also worsened, laying the groundwork for more record eurozone aggregate inflation data in May. A Reuters poll placed eurozone inflation expectations at 7.7% in May.

Despite resolving to cut 90% of oil imports from Russia by the end of 2022, the European Union is unlikely to tame worsening inflation in the near term, even with broader expectations of an aggressive 115 basis points (bps) rate hike in the second half of the year.

Commenting on the EU inflation predicament, chief currency strategist at RBC Capital Markets Adam Cole noted that “The risk is significant to the upside for the eurozone aggregate data.” He added: “A substantial upward revision to the ECB’s near-term inflation trajectory is likely when the ECB’s next round of staff forecasts are published in June.”

Record Monthly Gain Secure for Euro Despite Rebound in Dollar

The euro traded lower against the US dollar at press time, dropping from its monthly peak of 1.0786 to 1.0741. Regardless, the EUR/USD pair could close the month with a 2.2% gain, its highest monthly rise in 2022.

Meanwhile, the dollar recently benefited from a surge in US Treasury yields, halting the DXY’s losing streak.

In other news, reports that EU leaders agreed to cut a large chunk of oil imports from Russia on Monday sent oil prices soaring and boosted commodity-based currencies. The Canadian dollar extended its gains against the US dollar, sending the USD/CAD pair to the 1.2650 low on Monday. The CAD could extend its gains further in the near term ahead of the Bank of Canada (BoC) meeting, where economists expect the bank to implement a 50 bps rate hike.

 

You can purchase Lucky Block here. Buy LBlock

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$100 Min Deposit
9.8
  • Award-winning Cryptocurrency trading platform
  • 14 Cryptoassets available to invest in
  • FCA & Cysec regulated
$200 Min Deposit
9.8

Highly volatile unregulated investment products. No EU investor protection.

  • Trade top Cryptos such as Bitcoin, Litecoin and Ethereum plus more
  • Zero commissions and no bank fees on transactions
  • Around the clock service with support in 14 languages
$100 Min Deposit
8.5
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$200 Min Deposit
9
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9
Share with other traders!

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.