Euro US Dollar (EUR/USD) Exchange Rate Soars as Risk Appetite Grows
The Euro US Dollar (EUR/USD) exchange rate is rallying today as a risk-on mood pressures the US Dollar (USD).
At the time of writing the EUR/USD exchange rate is trading at $1.0661, up approximately 0.9% from this morning’s opening rate.
US Dollar (USD) Plummets amid Cheery Trade
The US Dollar is in freefall today as an upbeat mood permeates global markets.
The Federal Reserve’s decision to keep interest rates at a 22-year high sparked increasing appetite for risk across markets, leaving the safe-haven ‘Greenback’ to face heavy selling pressure.
Despite increasingly resilient US economic growth, the Fed continued to keep rates held in accordance with its goal of achieving a ‘soft-landing’ for the US economy.
Speculation that the Fed has reached the end of its rate hiking cycle and may now lean towards more dovish monetary policy continues to pare rate hike bets today, pushing the ‘Greenback’ further into turmoil.
Whitney Watson, Global Co-Head and Co-Chief Investment Officer of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management, commented:
‘The economy’s resilience has not stalled labour market rebalancing or revived wage and price pressures, suggesting disinflation will progress and indicating that the Fed will likely keep its policy unchanged into 2024’.
Euro (EUR) Bolstered by USD Correlation
The Euro (EUR) is surging today as bullish trade pressures USD, lifting EUR thanks to the currency pairing’s negative correlation.
Positive commentary from European Central Bank (ECB) Chief Economist Philip Lane is also offering the Euro some support today. In a speech, he suggested that the Euro area’s economic outlook is not as bleak as recently suggested.
Lane seemed confident in the Eurozone’s ability to reduce inflation without triggering a recession, despite growing economic concerns across the bloc.
He further stated that members of the central bank remained ‘fairly optimistic’ about the ECB’s chances of achieving a ‘soft landing scenario’ and added that there is ‘still a good case for it’.
Amid economic reassurance within the Eurozone and a declining USD, the common currency continue to soar as the session progresses.
Euro US Dollar Exchange Rate Forecast: US Employment Data to Dent USD?
Looking ahead, the release of fresh US employment data could spark additional volatility for USD on Friday. Economists forecast Non farm payrolls to have dipped from September’s 336,000 to 180,000 in October. If the figures retreat from an eight-month high, signs of a loosening labour market could dent the ‘Greenback’.
Furthermore, US unemployment throughout October is expected to have held at 3.8%. A steady employment rate could counterbalance losses caused by non farm payrolls by quelling concerns of drastically slowing employment.
However, if unemployment prints below forecast, the ‘Greenback’ may struggle amid signs of a weakening labour market.
The Eurozone’s unemployment rate for September is also due to print tomorrow. Much like its US counterpart, economists expect it to stay at 6.4%. If joblessness remains at historic lows, EUR could strengthen amid signs of robust employment.
Germany’s balance of trade figures for September are expected to see a slight decline. Could a narrowing trade surplus in the Eurozone’s largest economy dent the common currency?