Euro Weakens As Inflation Concerns Mount
May 31 2022 - 4:28AM
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The euro fell against its major counterparts in the European
session on Tuesday amid a drop in European shares, as a record high
inflation in the euro area intensified fears that the European
Central Bank is likely to act aggressively to tame price
pressures.
Flash data from Eurostat showed that Eurozone inflation
accelerated further in May on surging energy and food prices.
Inflation rose to a fresh record 8.1 percent in May from 7.4
percent in April. The rate was forecast to climb to 7.7
percent.
The ECB meeting is due next week, with policy makers preparing
to end the asset purchase program and back a rate hike in July.
The European Union agreed to ban oil imports from Russia into
member states, with a temporary exception for pipeline oil in
response to the war in Ukraine.
The euro fell to a 5-day low of 1.0689 against the greenback,
following a high of 1.0779 set at 6 pm ET. If the euro slides
further, 1.04 is possibly seen as its next support level.
The euro declined to 1.0260 against the franc and 0.8490 against
the pound, down from an early session's high of 1.0336 and a 5-day
high of 0.8529, respectively. The currency is seen finding support
around 1.00 against the franc and 0.83 against the pound.
The euro retreated from an early 3-week high of 137.99 against
the yen and a 4-day high of 1.6479 against the kiwi and edged down
to 136.80 and 0.8490, respectively. On the downside, 133.00 and
1.62 are possibly seen as its next support levels against the yen
and the kiwi, respectively.
The euro slipped to near a 4-week low of 1.4876 against the
aussie and an 8-day low of 1.3547 against the loonie, falling from
its prior highs of 1.4992 and 1.3642, respectively. The currency is
likely to find support around 1.45 against the aussie and 1.34
against the loonie.
Looking ahead, Canada GDP data for the first quarter, U.S.
FHFA's house price index and S&P/Case-Shiller home price index
for March and consumer confidence index for May will be featured in
the New York session.
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