Euro climbs above 1.22

The dollar continued to slide in Asian hours trading on Monday against the euro over expectations that the Federal Reserve will stop raising interest rates soon.

The euro passed through 1.22 on Monday after William Poole, chairman of the St Louis Federal Bank, said last week that he thought that the inflation environment was “stable”.

By early rtrading hours in London the euro was trading above 1.223 dollars per euro.

Supporting the euro is the fact that the Federal reserve is expected to raise rates only one more time at its next meeting on January 31, before pausing for several months.

The Federal Reserve has been gradually tightening rates for the past year and a half. The Federal Reserve rate currently stands at 4.25%.

While interest rates on dollar deposits are expected to remain fairly stable, the European Central Bank is expected to continue raising rates, thus making euro deposits more attractive.

The ECB’s main refinancing operations rate stands at 2.25%.

The Bank of Japan is also expected to tighten liquidity, if not actually to raise rates.