- BoJ Decision to Hold Rates Stokes Risk Aversion – EUR USD forecasts fall as safe-haven demand boosts US Dollar.
- Brexit Panic Finally Spills into Greater Europe – Eurozone sentiments mirror UK uncertainty and doubt with the Referendum just days away.
- Euro Rebounds Spectacularly against the US Dollar – Rate settles at just below the pre-dip figure.
- EUR USD Forecast: All Eyes Focus on the Possibility of a ‘Brexit’ – Thursday’s referendum could cause major market shockwaves
The Euro US Dollar exchange rate took a nose dive on Thursday in reaction to the Bank of Japan’s (BOJ) surprise decision to hold its rates steady.
Following the announcement, the Yen and US Dollar soared as safe-haven demand shot up.
The EUR/USD rate had normalised somewhat by the end of the week after the immense drop as market sentiment shifted slightly towards a more risk-on attitude.
It has been a strong week regarding data for the Eurozone but US data has not printed as favourably.
Regardless it appears that sentiment, rather than data, will continue to be the major influence in the markets this coming week.
The Euro to US Dollar exchange rate rebounded to just below the pre-slide figures by Friday, ending the week at 1.1259.
Euro No Longer Immune to Brexit Woes, EUR USD Forecast to Fluctuate on EU Referendum Uncertainty
‘Brexit’ concerns have seeped into Europe at last and the Euro is suffering as a result
With a week of very favourable data prints under its belt, sadly the Euro failed to gain against many of the majors in any tangible fashion.
The UK’s referendum on the European Union is set to take place on the 23rd and the swirling cloud of ‘Brexit’-based fallout has landed on the Union’s shores. Fear, doubt and uncertainty are all reaching fever pitch with the unprecedented event just days away.
A markd dive in the EUR/USD exchange rate on Thursday was due to the Bank of Japan effecting a bearish outlook but choosing to hold its rates steady. In response the Yen made major gains.
With the Yen soaring, safe-haven demand rose with it, bolstering USD significantly. The Euro saw a low of 1.1132 against the US Dollar after the announcement but found its way back up during Friday’s session.
US Dollar Strengthens Thanks to Save-Haven Demand
Although the US Dollar opted to leave interest rates on hold on Wednesday, putting pressure on the ‘Greenback’ in the process, the safe-haven asset was boosted by the BoJ’s decision.
The BoJ decision sent safe-haven demand into overdrive in a movement that saw the Euro lose well-over a cent against USD
The US Dollar settled somewhat as the week came to a close, allowing the Euro to nudge itself back up amongst weak US data prints. However, the forecast-busting result of the ‘Philly Fed’ index served to give the USD a small boost and safe-haven demand will continue until the market uncertainty dissipates.
EUR USD Forecast: Euro Exchange Rate Future Uncertain Ahead of EU Referendum
Next week’s movement is hard to predict as the great uncertainty that is the UK’s EU referendum goes to a vote on Thursday.
From the US, a useful amount of market reports are set for release over the week as well as Federal Reserve Chairwoman Janet Yellen testifying to the senate banking panel on monetary policy.
Yellen is set to engage with the SBP on Tuesday and analysts will look towards the rhetoric used by her to discern whether a change in sentiment is likely to occur.
Manufacturing PMIs, existing and new home sales, jobless claims, durable goods orders and a University of Michigan confidence survey are all pegged for release from the US. Naturally, an increase in all but jobless claims could create positive pressure for USD.
From the Europe, a cornucopia of PMIs and surveys are set to release throughout the week from Germany and the Eurozone in full. If data continues to show the Eurozone economy strengthening then it could possibly signal a rallying for the Euro even as it fights against ‘Brexit’ contamination.
That will be the big news of next week, as we all know. The UK’s ‘Brexit’ vote has the ability to cause shockwaves felt throughout the globe. If the result is a UK exit, market turmoil could occur.