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Euro US Dollar (EUR/USD) Exchange Rate Ticks Up following ECB Decision

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Euro US Dollar (EUR/USD) Exchange Rate Firms Post ECB Interest Rate Decision

The Euro US Dollar (EUR/USD) exchange rate is ticking upward today, in the wake of the European Central Bank’s (ECB) interest rate decision.

At the time of writing, EUR/USD is trading at around US$1.0919, an increase of just under 0.2% from the day’s opening rates.

Euro (EUR) Seesaws as ECB Lowers Inflation Projections

The Euro (EUR) is seeing volatile trade today, following the latest interest rate decision from the European Central Bank.

While the ECB kept interest rates unchanged as expected, the central bank also kept its communication similar.

The ECB’s accompanying statement emphasised a data driven approach, reading:

‘In particular, ECB’s interest rate decisions will be based on its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation and strength of monetary policy transmission’

This pushed the focus amongst investors to the central bank’s inflation projections. The ECB has revised these lower, with the expectation being that inflation will cool more than initially forecast.

Elsewhere, a risk-on market mood induced further pressure on the Euro, as its safer stature pushed it lower against risk-sensitive currencies.

US Dollar (USD) Undermined by Upbeat Trade

The US Dollar (USD) struggled over the course of Thursday’s session, as a decidedly bullish market mood sapped its appeal.

As a safe-haven currency, USD is unable to find its footing during the day’s trade as investors eye riskier investment opportunities.

Additionally, the latest initial jobless claims printed above expectations, and showed in increase in claims for the week ending March 2.

This is sparking concerns over the health of the US labour market, and is further amplifying bets that the Federal Reserve may need to begin cutting interest rates.

Additionally, USD remains undermined by comments from Fed Chair Jerome Powell, made during his testimony to US Congress. In this testimony, Powell indicated that policy easing would begin at some point during this year, which is prompting speculation of when these cuts will begin.

Euro US Dollar Exchange Rate Forecast: Falling US Job Openings to Dent USD?

Looking ahead for the US Dollar, the core catalyst of movement is likely to be the latest non farm payrolls data, due to print tomorrow.

In February, economists forecast a significant drop in the number of jobs created, with the figure expected to fall from 353,000 to 200,000. This could weaken the US Dollar by suggesting growing slack in the labour market, which may spark interest rate cut bets.

Furthermore, Fed Chair Powell is due to resume his testimony to US Congress tomorrow. If he pushes back against rate cut bets, USD may see its losses limited.

For the Euro, attention may be focused on the latest German industrial production data. In January, sector activity is expected to have increased by 0.6% which may lift EUR exchange rates.

However, if it surprises to the downside, the common currency could struggle to attract support from investors.