The Euro skyrocketed to its 3-week highs. Overview for 04.02.2022

EURUSD upsurged after the ECB meeting. 

The major currency pair skyrocketed after the ECB’s February meeting. the current quote for the instrument is 1.1450.

The Euro rose against all traded currencies after the European Central Bank declined the possibility of keeping its benchmark interest rate unchanged this year. 

During its February meeting, the ECB decided to keep the rate intact, just as expected, and confirmed its intentions announced in December – closing the stimulus package in March and terminating the PEPP programme until the end of 2024. 

In the comments, the ECB said that the European economy was continuing its recovery but the pace might slow down a bit in the first quarter due to the interruption in deliveries. The economic growth rate should boost in 2022, the same was said about the labour market. Overall, the situation is rather uncertain – inflation remains high, energy prices start influencing people’s income. At the same time, salary growth remains under pressure. Reports show that most parameters of core inflation rose and that makes the situation even more uncertain.

As for the rate hikes this year, the ECB made no promises, its decisions would depend on the statistics. The regulator said it was planning to re-evaluate the situation in March. 

Investors embraced the idea of rate hikes as a serious possibility of the first hike in the nearest future. This is exactly what pushed the Euro upwards.