The DXY index, which measures the dollar against a basket of strong currencies, fell by 8 this Thursday, while the euro was supported by the prospect of a tightening of monetary policy by the European Central Bank (ECB). In addition, investors have positioned themselves for the Producer Price Index (PPI, its abbreviation in English) of the United States, which comes out this Friday, 9, and for next week’s monetary policy decisions of the ECB, the Federal Reserve System (Fed, the Central Bank USA) and the Bank of England (BoE).

By evening in New York, the dollar rose to 136.65 yen, the euro to 1.0558 dollars, and the pound to 1.2239 dollars. The DXY index fell 0.31% to 104.774 points.

Oanda said the dollar is losing momentum ahead of the PPI data. Also this Friday, the University of Michigan publishes a survey of US inflation expectations. Convera, in turn, noted that the US currency and its major pairs do not fluctuate much ahead of the PPI and interest rate decisions next week. According to her, the euro fluctuated in a “narrow” range.

ECB President Christine Lagarde said today that the unstable environment poses risks to Europe’s financial stability. In addition, she recalled the ongoing tightening of monetary policy to contain high inflation, which returned it to the target of 2%. Inflation expectations in the euro area have risen, as shown by a review released today by the ECB itself.

According to ING, this increases the risk that the ECB will raise interest rates by 75 basis points (bp) next week. Capital Economics says the possibility exists, but sees a 50 basis point gain more likely and expects the ECB’s Governing Council to announce it will start cutting its balance sheet in the first half of next year, “but at a very slow pace.”

As for the Bank of England, Capital also believes in raising interest rates by 50 basis points next week, when the peak of the tightening cycle is closer. Danske Bank, on the other hand, sees a 50bp Fed hike more likely. 5.25%.