EUR/USD Exchange Rate Extends Yesterday’s Lows as Absence of Data Limits Euro Appeal
The Euro US Dollar (EUR/USD) exchange rate has ticked lower today, although an absence of data limits significant movement. The US Dollar (USD) continues to find support on the prevalent risk-off market mood.
At the time of writing, the Euro trades at $1.1764, the lowest rate since April 5.
Euro (EUR) Wavers, Edges Down as Coronavirus Concerns Weigh Upon the Currency
The Euro (EUR) faltered during this morning’s trading, seeing marginal gains before returning to lower levels. Ongoing concerns about the Covid-19 pandemic continue to weigh upon the single currency as cases rise across the bloc: new EU cases rose to 61,780 over the weekend, the highest number since mid-May.
The UK recently enforced quarantine measures for travellers returning to the UK from France, over concerns relating to the coronavirus ‘Beta’ variant; meanwhile, Spain saw Covid cases peak over the weekend to 27,247.
Lawrence Young, virologist and professor of molecular oncology at Warwick Medical School, decries the UK’s move as unnecessary ‘knee-jerkism’ – whether it’s necessary or not, however, the effect of such policies has a tangible effect on Euro trading sentiment.
Global perception of the EU’s handling of the virus as well as the pace of the vaccination campaign will continue to drive Euro sentiment.
In addition, investors are avoiding placing risky bets as markets await the European Central Bank’s (ECB) latest interest rate decision. Traders will be looking to see if the bank chooses to shift monetary policy following its strategic overhaul a couple of weeks ago.
US Dollar (USD) Retains Strength on Safe-Haven Status, Hawkish Fed Policy
The US Dollar, as a risk-off trading mood lends support to the ‘Greenback’.
USD represents a safe-haven investment as traders remain worried about the potential economic fallout from the spread of the highly contagious Delta variant.
‘Greenback’s strength is also underpinned by the Federal Reserve’s shift to a more hawkish message at its meeting in late June.
Investors continue to adjust to the Fed’s hawkish stance, prospects of higher inflation in the US and potential QE tapering earlier than anticipated, feeding into a positive outlook for US markets.
Economists expect the American economy to continue growing over the coming year, fuelled by job gains, pent-up savings and continued fiscal support. As the pandemic fallout continues to cause problems for businesses and economies globally, the US Dollar will likely benefit from bearish trading for some time to come.
Euro US Dollar (EUR/USD) Exchange Rate Forecast: Markets Await ECB Interest Rate Decision
Tomorrow, all eyes will be on the latest interest rate decision from the European Central Bank. Investors will be keen to know whether ECB President Christine Lagarde plans to maintain sustainable financial conditions, or review the bank’s forward guidance in line with new strategy goals.
For US Dollar traders, initial US jobless claims could provide fresh impetus for USD to trend higher against its peers, in addition to a steady rise in Covid cases; the EUR/USD exchange rate will continue to be driven by further coronavirus developments, as investors inevitably favour safe-haven USD in times of trouble.