Increased volatility has seen the EUR/USD trading from just under 1.04 and bouncing back all the way to 1.08. However, the euro remains in a delicate state, economists at the National Bank of Canada report.

A temporary reprieve?

“While the ECB cannot afford to be as aggressive as the Fed when it comes to normalization, rate increases are needed to send a signal that something is being done to tame inflation. The first hike could come as soon as July and the second half of the year could give some support to the euro.”

“We remain cautious as growth in the second quarter was likely held back by the geopolitical backdrop. Conditions in the Eurozone are likely to remain difficult for some time and could limit the central bank.”