Traders dash for cash

The euro rally against a weaker dollar appears to be exhausted.

• The EUR/USD couldn’t pick a winner last week as the heavily-traded pair finished virtually sideways with a mere 2.9 pips to the downside. It did, however, sprint to a 9-month high of $1.0930 before diving back under the flatline and closing the week at $1.0864.
• Interest rate moves have been the leading factor driving the volatility behind the EUR/USD. On the one hand, the US Federal Reserve has been hiking rates aggressively in efforts to cool down looming inflation pressures. On the other hand, the European Central Bank has been moving a bit slower on the rates front.
• Currency markets are pricing in a 50 basis points hike in each of ECB’s next two policy meetings, the first one slated for Thursday. Overseas, the Federal Reserve is expected to raise rates by another 25 basis points this Wednesday. In addition, don’t forget that Friday is reserved for the US jobs report – the figures hold the potential to spark elevated swings in the EUR/USD.