Euro Vulnerable to Weakening Trend Against US Dollar Amid Growth Concerns

HSBC strategists are warning that the Euro (EUR) may be at risk of moving lower against the US Dollar (USD), citing concerns over weak eurozone growth, rising energy costs, and deteriorating terms of trade.

The European Central Bank's (ECB) cautious stance on interest rates has also contributed to this assessment. On July 23rd, the ECB held rates at 2.25% and reiterated a data-dependent approach, which is seen as weakening support for EUR/USD.

Higher yields have been propping up the Euro in recent weeks, but this support is considered fragile and may not last if investors refocus on growth concerns and terms-of-trade risks.