EUR: Supported by hike speculation and PMIs – Danske Bank

Danske Research Team points out that the Euro was the second-best performing G10 currency last week after the Norwegian Krone (NOK), despite elevated energy prices. The move is linked to speculation about a possible European Central Bank (ECB) rate hike as early as April, which has pushed Euro interest rates higher. Upcoming March PMIs for the Euro area are flagged as key data this week.

Euro benefits from ECB repricing

"After NOK, the EUR was the best performing G10 currency last week - a surprising feat since the pressure on energy prices remained high."

"Speculation in an ECB hike already at the next meeting in April has sent EUR interest rates higher and kept the EUR well supported."

"In the euro area, the flash consumer confidence indicator for March is released, which will shed a first light on how consumer sentiment has reacted to the war in Iran and subsequent energy price increases."

"The key market events this week are tomorrow's March PMIs for the euro area, UK, and US, and Thursday's Norges Bank meeting."

"From the ECB, President Lagarde struck a balanced tone, likely reflecting divisions within the Governing Council. While Nagel hinted at a potential rate hike in April if inflation risks increase, other members appeared more measured, signalling a calmer approach compared to 2022. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)