The euro is close to a 16-month low after the Merkel ‘bell’ for the coronavirus

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The euro is at a 16-month low amid growing concerns about the impact of new restrictions on Covid-19 in Europe, as Austria launches a full lockdown and Germany thinks the same.

Angela Merkel told members of her conservative party that the measures taken to stem the pandemic in Europe’s largest economy were inadequate and needed stronger action.

Austria also launched its fourth lockdown, the first after the widespread release of vaccines, closing Christmas markets, bars, cafes and theaters.

The euro fell 0.2% to 1.1275 against the dollar, close to its 16-month low on Friday, when the Austrian lockdown was announced.

“The outlook for the euro looks like these rare cases where everything is aligned against the euro,” said a Societe Generale analyst.

“Coronavirus is a bigger problem in Europe than anywhere else,” he said, adding that it was not the only factor.

The Chinese slowdown and supply chain issues are hitting Europe harder than the US, and expectations that the Federal Reserve will raise interest rates have backed the dollar.

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