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Euro Drops to 2-Month Low After Powell's Hawkish Speech

The Euro fell to as low as $1,060 on Wednesday, where it moved near a two-month low of $1,053. Investors are now rushing for the dollar amid conditions the Federal Reserve will continue accelerating the pace of dollar policy tightening.

FED Chair, Jerome Powell, said that the US central bank might raise interest rates more than expected. This followed the release of data showing higher inflation than market estimates. This tight labour market has had an impact on the value of the Euro.

Following this, investors digested the hawkish statements from some policymakers from the Euro Central Bank. It was also stated that this would fight inflation, and the president of the Euro Central Bank, Christine Lagarde, said it would increase by 50 bps in March.

Inflation is also still a concern for the European Central Bank, mainly because of the impact of the Fed's tightening policy. For trade considerations, the Euro will continue to fall until Fed Jerome Powell later crosses the resistance range.


European Markets Close Higher with Euro Zone Inflation Eases to 8.5%, and This Makes Rising Wage Expectations

Europe continues to surprise with statistics by suggesting more room for a hawkish stance from the ECB next week. Hawkish inflation readings say that the market is optimistic about passing the worrying pattern of the year-on-year decline.

Vital euro zone data says that they will strengthen the hawkish case. This is the most characteristic driver for the forex market. The dollar has rallied as the Fed's tone has become more hawkish, and the fundamentals are in place for the EURUSD price hike.

Meanwhile, the European Stocks market closed higher on the next move. And now, food and beverage stocks led to the gains, and banks slipped in several sectors.

The headline of the inflation in the eurozone fell to 8.5% in February, with a figure of rate hike expectations. Regional markets closed lower on Wednesday, with the released economic data increasing from 9.2% in January.

Meanwhile, traders are now fretting about the continued rise in interest rates, and inflation expectations among eurozone consumers dropped in January for wage growth. Overall inflation is falling relatively quickly.

But underlying price pressure is now partly driven by rapid nominal wage growth in services. Inflation in the Euro for the next 12 months is said to have eased to 4.9% from 5% a month, considering the high price growth with wage growth of 5%.

The bank has raised rates by 300 basis points since July. It promised another 50 basis points in March, and markets have seen more than 100 basis points hike. But the European Central Bank chief economist, Philip Lane, said the interest rate rose until March.

EU Says Consumer Inflation Expectations Fall Significantly, According to the Statement from the ECB If Inflation Must Be Overcome

The current inflationary pressure information relates to rates beyond the following macroeconomic projections. The ECB continued the monetary transmission, which announced that inflation expectations fell significantly and bolstered the increase.

Expectations for three years ahead plunged to 2.5% in January, which became a money market with an eased rate increase in wagers. ECB officials also said they started to stake positions regarding what should come after. And still, inflation has been far more stubborn.

Christine Lagarde, president of the European Central Bank (ECB), said that the latest data means that the ECB will have to keep raising interest rates to ensure price stability. But the economists had forecast a more significant drop to 8.2%.

Inflation in Europe is no longer a problem to focus on, even though the economy has been down for a while. The Euro Central Bank is now focused on overcoming pressure from the US Central Bank, the Fed.



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