The Greenback Takes a Hit as the Euro Makes Gains

Hawkish Moves Ahead

ECB President Christine Lagarde is expected to move the deposit interest rate up by September as inflation continues to rise. Following the announcement, investors delved into riskier assets as their concerns about a recession were somewhat eased and overall sentiment for economic growth tilted towards more positive territory.

Events in Focus

Interest in the greenback remains strong despite foreign currencies moving to the upside. A rise in the euro, however, arrived as the ECB surprised investors with hawkish projections. The upcoming change in policy is likely to benefit the euro, but USD bulls will be ready to take charge this week in anticipation of the Federal Reserves meeting minutes. On Wednesday, the US central bank will release minutes from its last meeting on May 3-4 when Fed officials approved a half-percentage-point interest rate increase.

Additionally, in the spotlight this week is the geopolitical stand-off in Asia as U.S. President Joe Biden visits the region. Shanghai is moving slowly out of the strict lockdown as the government rolls out a flurry of actions to support the economy and reassure investors.