Euro Was on Track For its Biggest Weekly Gains in Weeks

The single currency declined on Friday. Nevertheless, the euro was on course for its biggest weekly gains in six weeks as traders breathed a sigh of relief after the Russian Federation avoided default on dollar-denominated debt and markets assessed the impact of the start of the U.S. rate hike cycle.

The euro drifted lower towards the $1.10 levels even though the greenback’s broad losses and optimistic comments by European policymakers supported the single currency. Notably, Dutch central bank chief Klass Knot said he expects only one rate hike this year.

A rally on Thursday across global markets including stocks, bonds, and others showed investors on the sidelines remain eager to buy beaten-down assets at the slightest sign of an end to the war in Ukraine. 

Euro and the U.S. dollar

The euro fell 0.5% against the U.S. dollar to $1.1037 on Friday. However, the single currency was still up 1.52% for the week. It was on course for its biggest weekly rise since the first week of February. Back then, the European Central Bank’s President Christine Lagarde signaled for the first time that interest rates will rise in the eurozone in 2022. 

The dollar index which tracks the U.S. currency against a basket of currencies rose 0.4% to 98.36. The dollar index declined to 97.724 on Thursday for the first time since March 10.

The Japanese yen was close to its lowest point in several years. It was near a six-year low after the central bank left its ultra-accommodative policy settings unchanged on Friday. 

Traders stayed optimistic regarding the war in Ukraine as talks continued between Russia and Ukraine. Unfortunately, the situation in the country remains complicated. On Friday Russia fired missiles at an airport near the city of Lviv.

Elsewhere, bitcoin and ether fell 1.5% and 1% respectively.