Daily digest market movers EUR/USD bounces back despite multiple headwinds

EUR/USD manages to recover intraday losses on Tuesday. Still,  investors expect the major currency pair to remain on the backfoot as European Central Bank (ECB) policymaker and President of Bundesbank Joachin Nagel cited concerns over economic weakness in the Eurozone’s largest economy, Germany, in his speech on Monday, Reuters reported.

"Germany is stuck in a period of economic weakness which has now lasted two and a half years," Nagel said. He added, "Stagnation is likely in the final quarter of this year," and warned that the economy could fall behind other nations of the bloc. 

Despite citing fears over growth, Nagel supported gradually reducing interest rates to ensure inflationary pressures get fully tamed. "It is important to remain cautious and to loosen monetary policy only gradually and not too quickly," Nagel said.

Also, ECB Chief Economist Philip Lane praised the bank’s gradual policy-easing action in an interview with French newspaper Les Echos on Monday. Lane said that inflation is still higher than where the ECB wants it to be as a major decline in price pressures has come from moderation in energy costs, while inflation in the services sector is still too high.