By Krisada Yoonaisil Financial Markets Strategist atExness
The euro stabilized to a certain extent on Monday as the US dollar slid and ahead of a pivotal period for global monetary policy, with the European Central Bank set to decide interest rates on Thursday. Markets remain fragile amid persistent geopolitical tensions in the Middle East, which have pushed oil prices higher and revived concerns about inflation in Europe. While interest rates are expected to remain unchanged, attention could turn to the ECB’s forward guidance and assessment of energy-driven price risks.
Energy has quickly become the central variable shaping the eurozone outlook. EU energy ministers are meeting to discuss emergency measures aimed at mitigating the surge in oil and gas prices triggered by disruptions to global supply routes. Higher energy prices risk feeding directly into inflation figures, limiting the ECB’s ability to ease policy in the near term and potentially keeping European yields elevated.
At the same time, underlying economic signals remain mixed. Recent data showed eurozone industrial production falling sharply, highlighting persistent weakness in the manufacturing sector. Before the ECB’s decision, markets will also monitor ZEW sentiment and inflation readings. The latter could also affect sentiment toward the currency.
|
||||
|
|
