The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.44% on Friday morning.
After European Central Bank President Mario Draghi gave a speech regarding monetary policy on Thursday, the shared currency slumped versus most of its major peers. The declination continued on Friday with investors unhappy about the vague information and general opacity of the institution.
The US Dollar, meanwhile, edged higher versus most of its major competitors as traders await key labour market data. With Non-Farm Payrolls set to improve, traders will hop that positive data will pressure the Federal Reserve into hiking rates.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0981.
The Euro to US Dollar (EUR/USD) exchange rate declined by around -0.33% on Thursday afternoon.
After the European Central Bank (ECB) kept rates on hold, the shared currency slumped versus most of its major peers. The accompanying press conference saw President Mario Draghi stating that rates would be kept on hold until quantitative easing has normalised the inflation rate. The extensive program of QE is set to launch next week.
The US Dollar, conversely, strengthened versus nearly all of its most traded currency competitors despite disappointing domestic data. The appreciation is the result of traders looking towards Friday’s Non-Farm Payrolls data, which is the winning card when it comes to the top trumps of US data publications.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1044.
Euro (EUR) Exchange Rate Plummets on Draghi Comments
As mentioned above, the accompanying press conference to the ECB rate decision on Thursday saw the shared currency slump following Draghi’s comments. ‘We will on 9 March 2015 start purchasing Euro-dominated public sector securities in the secondary market,’ he said.
‘We will also continue to purchase asset-backed securities and covered bonds which we started last year,’ he added.
‘In saying that QE could last well beyond 2016, Mr Draghi is showing that the ECB is determined to continue until it gets the results it needs. They are perfectly aware that they cannot afford to fail,’ said Mauro Vittorangeli of Allianz Global Investors.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low today of 1.1004.
US Dollar (USD) Exchange Rate Strengthens Irrespective of Domestic Data
US labour market data printed poorly on Thursday, but the US Dollar continued to strengthen. This is likely to be a result of traders looking ahead to the Non-Farm Payrolls data, which is forecast to improve.
Initial Jobless Claims saw 320,000 newly unemployed, eclipsing the median market forecast of 295,000. Additionally, Continuing Claims failed to meet with the forecast figure of 239,500 claimants, with the actual data showing 242,100.
Further gains could be attributed to the fact that the Federal Reserve recently ended their long program of quantitative easing, highlighting policy divergence as the ECB launches QE and the Bank of England (BoE) leaves its Asset Purchase Target unchanged.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Losses
Given that the US Dollar strengthened irrespective of disappointing data, and with ECB policy ever looser, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold losses for the rest of Thursday’s trade.
Friday ought to see EUR/USD volatility with German Industrial Production and US Non-Farm Payrolls due for publication.
The Euro to US Dollar (EUR/USD) exchange rate reached a high today of 1.1114.