Eurodollar Unlikely to Make Imminent Return to Winning, Experts Warn

Forex
© Reuters.  © Reuters.

By Yasin Ebrahim

Investing.com – The euro fell against the dollar on Wednesday, and analysts are warning that there is little chance that the single currency can mount an imminent comeback after snapping its three-week winning streak last week.  

fell 0.2% to 1.1233.

“We are inclined to see recent developments as a reason for a pause in the risk rally and pause in the bearish USD decline, rather than a material reversal of the prior risk asset gains (both in the equity and FX spaces),” ING said.

With the dollar’s recent decline on hold, the advance in the euro should “pause too,” the bank added, souring the prospect of the eurodollar rising above $ 1.15 in the immediate future.

The sluggish day for the euro arrived on the back of the data confirming that inflation in the economic bloc remained at near four-year lows, strengthening expectations the European Central Bank will persist with ultraloose monetary policy.

The final estimates of inflation in May confirmed a 0.2% in the headline rate to 0.1% year-on-year, the lowest rate since June 2016.

Some caution, however, of putting too much emphasis on the latest inflation numbers as difficulties collecting data “have eroded the quality of these inflation figures, with estimates of prices of more than one fifth of items.. were imputed by the statisticians or judged to be of low reliability,” Daiwa Capital Markets Research said.

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