Euro Falls Amid US Dollar Recovering

Market Reviews

The euro fell sharply against the US dollar amid a large-scale strengthening of the American currency, as well as cautious statements by ECB representatives. In addition, the decline in the pair was strengthened by weak data on economic sentiment in the Eurozone. The indicator of economic sentiment in the euro area from the European Commission fell to 112.6 in March from the revised level of 14.2 in February, below the forecast of economists 113.4. The European Commission's Business Climate Indicator also fell by more than forecast to 1.34 in March from 1.48 in February.

The US dollar has recovered and is now trading as the strongest one for day, followed by Canadian Dollar and then Japanese yen. Global stock markets were boosted by receding trade tension between the US and China. The DAX rose by 1.8%, CAC increased by 1.4% and FTSE up 2%.

Eurozone M3 Money Supply increased by 4.2% in February compared to the same period last year, which is less than the growth in January by 4.5%. The expected growth was 4.6%. The German Import prices fell by 0.6% year-on-year in February, in contrast to the growth of 0.7% in January. This was the first decline since October 2016. Economists expected the decline of the indicator by only 0.3%.

Ewald Nowotny (ECB Governing Council member) said the European Central Bank will probably decide this summer to slash its bond purchases if things develop as expected. Also, ECB Governing Council member Erkki Liikanen stated, that the European Central Bank needs to remain patient in removing stimulus, as underlying inflation in the Eurozone may remain lower than expected even if growth is robust.