The Euro to US Dollar (EUR/USD) exchange rate softened by around -1.02% on Friday afternoon.
After the Swiss National Bank removed its Euro cap, demand for safe-haven assets increased substantially. Thanks to its safe-haven qualities, the US Dollar appreciated despite fears that the recent succession of disappointing domestic data results eases pressure on the Federal Reserve to tighten monetary policy.
The common currency slumped versus all of its major peers following the shock move by the SNB. With the black cloud of quantitative easing looming overhead, the Euro is trending lower versus most of its rivals on Friday.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1516.
Euro (EUR) Exchange Rate Softens on SNB
Not only did the SNB’s shock removal of the Euro cap have an immediate detrimental effect on the single currency, further losses are likely as traders speculate as to the reasoning behind the move. If, for example, the SNB decided to remove the cap as insurance against the European Central Bank’s proposed stimulus programme, it could mean the bond-buying scheme will be far more aggressive than most anticipate.
In addition to the downtick caused by the SNB, continued quantitative easing rhetoric is buzzing around the Euro like flies on a dung-heap. With amplified demand for safe-haven assets, the Euro is far too risky to invest in before the ECB makes its move.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low today of 1.1564.
US Dollar (USD) Exchange Rate Rises despite Mixed Data
As explained above, the heightened demand for safe-haven assets caused the US Dollar to appreciate versus many of its currency competitors. This is in spite of mixed data which showed consumer prices declined. The Consumer Price Index dropped from 1.3% to 0.8% in December, managing to avoid the forecast declination to 0.7%. The CPI Ex Food and Energy, however, dropped beyond the median market forecast of 1.7%, with the actual result hitting 1.6%.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Decline
Although there will be several reports released later on Friday with the potential to cause Dollar volatility, including the University of Michigan Confidence Index, the US Dollar is advancing irrespective of data thanks to demand for safe-haven assets. Therefore, the Euro to US Dollar (EUR/USD) exchange rate is likely to continue trending lower on Friday.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high today of 1.1650.