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Comments from ECB Restore Some Faith In Euro

July 12, 2017
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After experiencing a high in the last week, Euro has been fading in value in the forex market. The Pound gained strength following the comments from Bank of England. The interest in USD reduced as the market experts understood that bullish status is expected from other global currencies as well.

Euro which was struggling in the market experienced a new bullish movement when the ECB comments excited the market. Euro reached a fresh high last week as the currency is expected to fare well in the upcoming summer months. Except for the British Pound, many other global currencies succumbed to the strength of Euro. The European Central Bank (ECB) has indicated that the economy is set to follow a normalization path. New Staff Economic Projections (SEPs) are also expected to provide a boost to the existing economy. Draghi, president of ECB gave a speech on Tuesday which showed that the thought making processes are undergoing a change. This means that Euro is on the path to dominate the forex market in the future.

Generally, lower unemployment rates trigger a higher inflation pressure. Currently, with varying inflation rates across the Eurozone, the inflation rate is less than 2%. Draghi has commented that improved growth and increased labor outlook could result in a rebound in inflation. Reduction in the unemployment rate is also expected to increase inflation which could motivate ECB to scale the QE program. Euro was provided the much-needed catalyst by Draghi’s comments.