Forex Top Team

The fight against inflation and the financial instability in Europe: Which will dominate the euro market?


The euro is declining in the London market today. The ECB raised interest rates by 50 basis points at its meeting last week, impressing the market that it is prioritizing containment of inflation. Today, German Federal Reserve Bank President Nagel said, “The fight against inflation is not over yet,” “We need to raise the policy rate to a sufficiently restrictive level,” and “We hope to accelerate the QT from the third quarter.” was made large.

However, the recent financial instability in Europe is spreading. A series of European bank stocks, including Deutsche Bank, plunged today. Deutsche Bank’s shares were bought by UBS to bail out Credit Suisse, which is currently down 14%. This has led to investor distrust and European banks’ AT1 bonds to be sold in general, leading to a plunge in bank stocks. In the short term, euro selling pressure will prevail.


Attention is focused on AT1 bonds, and we expect them to be risk-off tonight. Risk aversion has become stronger, and buying is concentrated in GOLD and JPY. GOLD buying continues.

More Insights