The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.20% on Friday morning.
As I am sure you’re aware, the surprise move by the Swiss National Bank to remove its Euro cap caused extensive volatility, with long-term repercussions. With safe-haven demand increasing, the US Dollar strengthened against many of its peers. The appreciation has been somewhat laboured ahead of the US inflation data due for publication later on Friday.
The Euro, meanwhile, is generally trending lower against its major peers. The obvious ramifications of the cap removal notwithstanding, further declination is a possibility as traders speculate as to the reason behind the SNB’s move. If they wished to sever ties with the shared currency because of the planned quantitative easing, it begs the question of just how extensive the European Central Bank intervention will be.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1615.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate softened by around -1.58% on Thursday.
Despite the fact that German growth data printed in line with expectations, the shared currency continues to slide versus its major peers. This is as a result of the European Central Bank getting the go-ahead from EU courts to start an aggressive bond-buying programme and the Swiss National Bank’s removing its cap against the Euro.
The US Dollar softened from recent highs after traders feared the surge was overdone. However, the US Dollar is still stronger versus the majority of its most traded rivals as hawks continue to pressure the Federal Reserve into tightening fiscal policy.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1599.
Euro (EUR) Exchange Rate Dives on QE
As we draw ever closer to ECB intervention in the Eurozone, the common currency softened versus its competitors. The downtrend was amplified after EU courts ruled in favour of the ECB’s bond-buying programme.
Jonathan Loynes, chief European economist at Capital Economics, said: ‘Overall, then, the final hurdle to quantitative easing appears to have been cleared. But given the ECB’s natural caution, Germany’s objections and the limited effects of QE in other countries, it would be hopeful to expect it to transform the Eurozone’s economic outlook.’
‘The ECB must have a broad discretion when framing and implementing the EU’s monetary policy, and the courts must exercise a considerable degree of caution when reviewing the ECB’s activity, since they lack the expertise and experience which the ECB has in this area,’ a statement said.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low today of 1.1575.
US Dollar (USD) Exchange Rate Softer on Unjustified Gains
Of all the major currencies, the US Dollar has strengthened the most thus far in 2015. The surge has continued irrespective of domestic data results as speculation pointed to a near-future rate hike. However, the most recent disappointing retail sales data has compounded fears that the surge was unjustified, and the Fed will continue to postpone monetary policy normalisation.
‘These figures were a big surprise,’ said Marc Chandler, global head of markets strategy at Brown Brothers Harriman in New York. ‘Between the weakness of the data on the US economy and the continued drop in commodity prices, the market is questioning the conviction that the Fed will raise rates in the middle of the year.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Losses
Although US labour market data due for publication on Thursday afternoon has the potential to spark volatility, the prospect of ECB QE will overshadow any data results. Therefore, the Euro to US Dollar (EUR/USD) exchange rate is likely to continue trending lower.
The Euro to US Dollar (EUR/USD) exchange rate reached a high today of 1.1791.