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March 23, 2023

Euro retreats after recording the best first quarter

The 17-nation currency slipped against majors yesterday, after posting the best kick off of a year till March on the improvement in Germany and increasing possibilities the ECB would raise interest rate, on worries regarding the region’s debt-ridden economies, according to fxstreet.com. The euro closed March and last week on gains as the progress seen in the latest data from the biggest economy in the region revived hopes that Germany will lead recovery this year. Also, since the announcement of Trichet last month that the ECB may raise interest rate in April on the back of the rise in inflation to 2.6% in March, according to the CPI flash estimate, the euro gained further strength. Yesterday, euro zone PPI for the month of February printed 6.6% on the annual basis compared with revised 5.9%. Yet, on the other hand, there are some worries that raising interest rate by the ECB may harm debt-strapped nations that still repay debt and with speculations that Portugal will accept a bailout from the EU, concerns are aggravated more which pushed the pair to the downside on Monday. On the other hand, the dollar index, which tracks the dollar movements versus a basket of major currencies, inched up to trade at 75.90 compared with the day’s opening level of 75.85.

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