Foreign exchange analysts and financial strategists are optimistic about the outlook for the euro, stating that Europe is attempting to prevent its economy from slipping into a recessionary cycle, while other global financial markets outside of European countries paying in the European currency, the euro (EUR), are entering a year of uncertainty against a backdrop of changing economic data and monetary policy. These analysts note that a number of factors affecting the euro are still very volatile, so it would be premature to speak of major stability in the exchange value of the euro at this time.
The Euro, which is now traded by 20 European countries, has recovered in recent months and traded at a cross exchange rate of USD 1.0909 per EUR in the forex market on Wednesday, 25 January this year 2023, with the EUR strengthening by +0.22% against the USD so far. This follows the decline of the single European currency (EUR), below parity with the US Dollar in the second half of 2022. This cross-exchange rate was obtained against a backdrop of declining USD exchange value as indicated by the US Dollar Currency Index. At the time and date specified, the DXY index indicated 101.82 USD points of USD strength, with a daily fall of -0.10% points overall.
The aggressive tightening of monetary policy by the so-called US Fed, according to brokerage analysts and foreign exchange market experts, is at the root of the Euro's weakness, while the European Central Bank (ECB) has much more recently broken out of these fictitious blocks of interest rate hikes to control its own runaway inflation in the Eurozone. Although some analysts this week have noted the possibility of a cooling of rate hikes in Washington, the trends of the incoming data imply that the aggressive strategy of rising interest rates needs to continue in Frankfurt, where the ECB is headquartered. Experts believe that the Fed's closure of the so-called interest rate gap will be beneficial for the euro. The economic threat posed by the unprecedentedly high energy prices in the euro area has also now passed, amid an unusually mild winter in much of Europe and especially in parts of northern Europe.