The Euro has continued to push higher against the US dollar in today’s trading session, following on from yesterday’s solid gains after comments from a European Central bank board member that more aggressive rate hikes a needed by the central bank to rein in Inflation.
European Central Bank (ECB) Governing Council member Madis Muller told noted earlier today that the ECB's monetary policy is still accommodative, and they need to move further with tightening to bring down consumer prices
"Inflation calls for significant rate hikes," Muller noted and added something similar to the last two hikes would be appropriate.
But just as it’s been for the last month, many see this latest rally as a dead cat bounce and the looming recession in the Eurozone as well as the ongoing conflict between Ukraine and Russia is likely to bring the Euro back down to earth,
We don't think the EUR is out of the woods yet and managed to make another forecast downgrade for the months ahead.” said analysts from TD Securities
“The biggest driver relates to the feedback loop between the ongoing terms of trade shock and the growth outlook. The ECB has helped to cushion the downside, but the EUR remains the shock absorber for these lingering shocks. Our tracking of global and EZ growth drivers points to a push towards 0.92 now.” They added.