The Euro to US Dollar (EUR/USD) exchange rate is trending within a tight range on Thursday morning.
As traders await the European Central Bank (ECB) policy decision, in which most strategists anticipate the announcement of some form of quantitative easing, the Euro is generally holding steady against most of its major peers. With uncertainties regarding the extent of the expansive measures, investors are generally treading cautiously.
The US Dollar, meanwhile, is seeing little movement with investor focus firmly on European affairs. However, the labour data due for publication later on Thursday has the potential to provoke Dollar volatility.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1609.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.39% on Wednesday Afternoon.
As we draw nearer to the European Central Bank’s (ECB) policy decision, which most experts expect to result in the announcement of expansive measures, the Euro strengthened against most of its major peers. This can be attributed to traders fearing the recent declines in the currency were unjust amid speculation of a watered-down version of quantitative easing.
The US Dollar, meanwhile, softened versus the majority of its most traded rivals as a result of mixed economic data. With a series of less-than-impressive US data publications weighing on the Dollar of late, speculation is rife that the Federal Reserve will delay policy revision for a considerable time.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1589.
Euro (EUR) Exchange Rate Gains on Dovish ECB Speculation
After having declined significantly as traders priced in an aggressive bond-purchasing programme, the shared currency recovered some of its losses on Wednesday amid speculation the ECB will act dovishly. Whilst most agree the central bank will introduce a version of QE on Thursday, opinions differ dramatically when it comes to how aggressive the measures will be.
‘A sizeable percentage of the market is factoring in some sort of quantitative-easing announcement, so there’s a touch of trepidation,’ said Alistair McCaig, analyst at IG. ‘Investors have bought the rumour so they could sell the news.’
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low today of 1.1539.
US Dollar (USD) Exchange Rate Ticks Lower on Mixed Data
After US economic data produced mixed results on Wednesday, the US Dollar softened against most of its major peers. The latest disappointing results add fuel to speculation the Fed will delay a cash rate increase for the foreseeable future.
US Mortgage Applications declined from 49.1% to 14.2%, and Building Permits failed to meet with the forecast growth of 0.8% following the previous month’s -3.7% decline, with the actual data showing a -1.9% drop. Housing Starts, however, showed a positive increase of 4.4%, eclipsing the market consensus of a rise of 1.2% and almost wiping out the previous month’s -4.5% decline.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains
With many uncertainties surrounding the proposed stimulus measures from the ECB, and with an absence of domestic data to curb the trend, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold gains for the remainder of Wednesday.
The Euro to US Dollar (EUR/USD) exchange rate reached a high today of 1.1641.