Euro gains against the dollar

Published: 22 May at 7 AM Tags: Euro, Dollar,

The euro is up against the US dollar following signs of slight economic recovery in the eurozone. The single currency has been given a boost by a German Bund yield rise. The euro is currently up 0.7 per cent at $1.1182 after hitting a three week trough on Wednesday of $1.1062.

Although PMI data for the eurozone indicated a drop from 53.9 to 53.4 despite expectations that the latest figure would be closer to 53.8, analysts appear positive that over the current quarter the eurozone will show growth of 0.4 per cent.

Euro gains have remained limited because of the European Central Bank’s accommodative monetary position. As more euros are printed and put into the market the common currency will move lower. However, it is still too early for any serious moves towards quantitative easing.

The strength of the euro has pushed the dollar from a two-week high against other major currencies. The latest policy meeting at the Federal Reserve produced few surprises. Most investors and analysts are now not expecting a hike in interest rates before later on in the year.

Most policymakers have made it clear that they think it would be a mistake to push up rates as early as June.