The Euro has stalled for a 2nd straight day against the US dollar as we enter todays European trading as investors remain worried about the growing tensions in the war between Ukraine and Russia which skyrocketed to a new high last week.
Russian President Vladimir Putin signed treaties Friday to illegally annex more occupied Ukrainian territory in a sharp escalation of the war and vowed to protect newly annexed regions of Ukraine by “all available means,” a renewed nuclear-backed threat he made at a Kremlin signing ceremony where he also railed furiously against the West, accusing the United States and its allies of seeking Russia’s destruction.
Ukraine’s president hit back with a surprise application to join the NATO military alliance that may send the two leaders speeding faster on a collision course that is cranking up fears of a full-blown conflict between Russia and the West.
To add fuel to the fire US President Joe Biden declared that a massive leak from the Nord Stream gas pipeline system in the Baltic Sea was an intentional act and threatens to further disrupt the energy supply to Europe for the winter season.
With war continuing close to the European borders, and record high inflation continuing throughout the Eurozone, Analysts at Wells Fargo predict more pain for the Euro and see the Euro pean currency falling by another 5 percent as we enter the new year.
“High and rising inflation should continue to weigh on the consumer, and energy supply disruptions could more directly impact manufacturing activity. Confidence surveys are now clearly pointing to contraction, especially for Germany– the region's largest economy.” They said.
“While the European Central Bank should raise rates further, underwhelming Eurozone growth should see it lag well behind the Fed, another factor that could see the EUR/USD exchange rate reach 0.9100 by Q1-2023.” They added.