The last few sessions have been better for the Euro, with EUR/USD recovering gently some of its recent losses, but a sustained rally from here remains unlikely. As has been the case for some time now, the European Central Bank, along with the Bank of Japan and the Swiss National Bank, has been right at the back of the queue of central banks intending to increase interest rates.
That will continue to hold back the Euro, even though recent research has suggested that EUR/USD is one of the currency pairs most sensitive to changes in “risk on, risk off” sentiment in the markets and that interest rate expectations are therefore less of an influence on EUR/USD than on some other currency pairs.
Still, the meeting of the ECB’s policy-setting Governing Council will be the focus of attention for Euro traders this week, even though it will end with Eurozone interest rates and all the bank’s various bond-buying programs left unchanged and, the ECB hopes, EUR/USD unchanged too.
