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EUR/USD Set for More Pain as ECB to Remain Dovish -Breaking

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© Reuters.

By Yasin Ebrahim

Investing.com – The euro fell to more than 16-month lows against the dollar Monday and is in for more pain after breaking through key support amid expectations for European central banks to remain dovish.

The price of $1.1383 fell by 0.59%

In a hearing at the European Parliament’s Committee on Economic and Monetary Affairs  ECB President Christine Lagarde on Monday reiterated that the ECB continues to expect inflation to remain below target in the medium-term and “very unlikely ” to be compatible with rate hikes next year.

Lagarde explained that the unwarranted tightening financing conditions would be detrimental to purchasing power and create a squeeze on buying power.

These remarks were made in the context of growing concerns about the European Union’s economic health. Parts of Europe, including Austria and the Netherlands, have taken partial lockdowns to stem a spike in Covid cases.

Germany is the EU’s most productive nation and plans to impose national vaccination restrictions on the unvaccinated.

“New lockdowns in Europe fuel growth concerns,” Commerzbank said, after noting the risk of further downside as the EUR/USD testing key support of $1.1420 before breaking lower.

Many others agree with this prediction and predict that EUR/USD will fall to $1.13 at the end November.

“Last week saw EUR/USD break below 1.1500, and we think there is now room for the pair to decline to the 1.1300 level by the end of November,” ING said in a note.

Market data shows that traders have been betting on a respite for one currency following a reduction in their bearish bets.

Speculative bets against the euro fell to five-week lows, with the net position on open interest rebounding further and flirting with the positive territory, according to the Commodity Futures Trading Commission Positioning Report for the week ended Nov. 2.

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