The euro’s value against the American dollar has been falling steadily since 16 June, according to the latest statistics from the European Central Bank (ECB).
The value of the currency most widely used across the eurozone stood at $1.1891 at the close of yesterday, having fallen from $1.2124 when it last peaked on 16 June. However, this marked an overall period of decline from 25 May when the rate between the two currencies hit $1.2264.
The exchange rate has fluctuated widely in the last year, from $1.1213 on 22 June 2020 to a peak on 6 January of $1.2338. The average over this time has been $1.1910.
Rally cut short
As reported in German paper Handelsblatt, the euro was given a boost at the start of the week by weakening fears that the Biden administration would pursue tighter monetary policy.
In addition, a report last week from Reuters quoted Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, saying that the recent downward pressure on the euro was due to policy from the ECB.
Schamotta said: “ECB policy makers are indicating that inflation rates are way below levels that are needed to put upward pressure on rates.”
He added: “That’s cutting away at the euro’s recent rally, putting some downward pressure on it. The biggest contributor to the move we’ve seen overnight is the (euro) weakness as opposed to idiosyncratic dollar positive forces. The dollar’s winning the reverse beauty contest.”
The American currency’s increasing strength follows a recent run of good news. Last week, the FT reported that it had recorded its largest two-day gain of the year. The paper pegged this to the bringing forwards of the Federal Reserve’s first post-pandemic interest rate rise.
Reported the FT: “The dollar index, which measures its value against a basket of other big currencies, jumped 0.87% on Thursday after gaining almost 0.6% in the previous session. The euro lost 0.77% against the dollar, taking it to $1.19 and taking the US currency’s gain over its eurozone counterpart to 1.8% over two trading sessions.”