Demand for defensive assets keeps the euro near a five-year low
EUR/USD chart in 60 minute intervals
On Monday, the euro rose slightly, remaining near a five-year low against the US dollar, as investors sought safety in the dollar amid fears of a slowdown in global growth.
The military conflict in Ukraine and its economic consequences, in particular the sharp rise in food and energy prices, have become a serious brake on the euro, which has weakened by more than 8% against the dollar this year. The difference between the reaction of the European Central Bank and the US Federal Reserve to higher inflation also put pressure on the euro.
Friday’s data showed euro zone inflation jumped to another record, adding to the case for the ECB raising interest rates this month.
Jeremy Stretch, head of G10 foreign exchange strategy at CIBC, said he expects the euro to remain headstrong as the ECB is set to raise rates on July 21 by „only 25 basis points.”