Euro falls: interest rate difference drives dollar

Euro falls: interest rate difference drives dollar

The euro continues to be under pressure in US trading, with the common currency last trading at $1.0640. In European business, the euro fell to its lowest level since the beginning of November. The European Central Bank set the reference rate at 1.0652 US dollars. This downward trend is mainly caused by the growing interest rate differential between the Eurozone and the US. The ECB is heading for a rate cut in June, while the US central bank Fed is still waiting to loosen its tight monetary policy. Higher inflation in the US and a more robust economy are helping the euro weaken while the dollar benefits.

Economic data from the US also confirms stubborn inflation, underpinned by rising consumer inflation expectations and significant increases in import prices in February. Ulrich Kater, chief economist at Dekabank, commented that the large economic differences between Europe and the USA could lead to a temporary divergence in monetary policy. He predicts that after an interest rate cut in June in the euro zone, another step could follow in the fall. These discrepancies in monetary policy and the economic situation could mean that the common currency remains under pressure for the time being.

It remains to be seen how the situation will develop in the coming months and what measures will be taken by the respective central banks to stabilize the currencies. The impact of these developments on the global economy and the foreign exchange market is of great importance as they can have far-reaching consequences for international trade and financial markets. It remains an exciting and challenging chapter for the euro and the global economy as a whole.