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EURUSD fell on Friday morning in the European market, and recorded its first daily loss, retreating from its highest level in three months, with the activity of correction and profit-taking operations, and the single currency is heading towards recording a weekly loss with the end of today’s session in light of the rise Possibilities of a US interest rate hike following historical inflation data, which recorded its highest level since 1982.
The EURUSD pair traded at the level of 1.1370, losing about 0.5% from the opening level of today’s session at 1.1426 dollars, and at the end of yesterday’s trading, the euro recorded gains against the US dollar by less than 0.1% for the second day in a row, achieving its highest level in three months at 1.1495 dollars.
The single currency is heading towards recording the third consecutive weekly loss against the US currency, with losses estimated at 0.7%, with strong expectations that the Federal Reserve will raise interest rates.
The US dollar rose against the basket of major currencies, and the index recorded at 95.45 points, down by 0.05%. This comes after inflation data that rose to historical levels. The repercussions of the US Consumer Price Index (CPI), which came higher than expected, significantly affected the markets, fueling speculation that the Federal Reserve may increase interest rates more aggressively, leading to the stronger dollar in the forex market.
Leading members of the Federal Reserve and the European Central Bank (ECB) have taken opposing positions, with St. Louis Fed President James Bullard arguing for a 100 basis point raise by July and European Central Bank President Christine Lagarde warning of the risks of weakening the economic recovery, if The European Central Bank is acting too quickly, as she stressed that raising interest rates is unlikely to fix the current inflationary challenges.
The Consumer Price Index (CPI) rose 0.5% m-o-m, recording 7.5% y-o-y, while the consensus expected a rise of 7.2%, the highest overall inflation rate since February 1982, and core CPI inflation, which excludes food and energy, rose 0.5 % MoM, to 6.0% YoY, slightly above market expectations (5.9%).
US Treasury yields rose significantly, with the two-year Treasury yield jumping 20 basis points to 1.57%, while the 10-year note was 2% (up 8 basis points).
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.
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