Euro to Dollar Week Ahead Forecast: Inflation and Central Bank Speak in Focus

The Euro to Dollar exchange rate entered the new week close to parity and facing risks associated with Wednesday's Federal Reserve (Fed) interest rate decision, although there may be an admittedly-wildcard possibility of the latter giving rise to a firecracker of a rally by the single currency later this week. 

One of Germany's biggest banks warns the German economy is set for a deeper fall than expected now that Nordstream 1 has been shut.

The Euro to Dollar rate sustained heavy losses after sharp increases in some U.S. inflation rates took the market by surprise but its earlier recovery from two-decade lows may have been merely delayed, rather than derailed, and in part because of the evolving Federal Reserve (Fed) policy outlook. 

The Euro to Dollar rate reversed a short-lived rally on Thursday after European Central Bank President Christine Lagarde made clear the potential costs of an escalating confrontation of inflation, which elicited the monetary union's largest interest rate rise to date in September's decision.

The Euro to Dollar exchange rate entered the new week with a spring in its step and could look to extend its nascent recovery through the days ahead unless the tentative rebound is scuppered by the possible monetary policy implications of U.S. inflation figures due out on Tuesday. 

ING Bank have released a "crib sheet" offering a rough guide on the potential FX market outcomes of Thursday's European Central Bank (ECB) policy decision.