The euro strengthened its positions against the U.S. dollar on Wednesday but was off Friday’s three-week high, as traders looked for clues as to when the central bank will increase interest rates.
The U.S. currency was little changed on Wednesday, a day before the release of U.S. consumer price data. The data may offer new indications regarding the pace of the Federal Reserve’s monetary tightening.
The euro gained 0.2% against the greenback to $1.1437 at 12:10 GMT, after touching $1.1483 on Friday. Last week more precisely on Friday, the euro reached its highest level since January 14.
The Dollar index which tracks the U.S. currency against a basket of currencies dropped 0.16% to 95.435. On Friday, the dollar index recovered from its lowest point in more than two weeks.
Euro and Christine Lagarde
On Monday, the European Central Bank’s President Christine Lagarde made an interesting comment. According to Lagarde, euro zone risks are on the rise but price pressures could still subside before becoming entrenched in expectations.
Christine Lagarde opened the door last week to an interest rate hike later in 2022. She stated that a March 10 meeting will be crucial in deciding how quickly the ECB would wind down its long-running bond-buying scheme.
A number of policymakers argued that the first move will be to speed up an exit from the bond-buying scheme. The ECB’s bond-buying scheme is due to run indefinitely but at least until October. So, an interest rate increase could only come after that time but quicker tapering could mean a raise, before the end of the year.
