Euro US Dollar Exchange Rate Remains Choppy amid Cautious Market Mood
The Euro US Dollar (EUR/USD) exchange rate fluctuates as a quiet trading weak leaves the market vulnerable to external pressures. Negative headlines out of China sap demand for riskier currencies as the Ukraine conflict compounds matters.
At time of writing the EUR/USD exchange rate is trading around $1.0648, relatively unchanged from this morning’s opening levels.
US Dollar (USD) Supported by Risk-Aversion Market Mood
The US Dollar remains fairly quiet amid the festive lull in the markets. Troubling news out of China could spur safe-haven flows as Covid infections wreak havoc on the country’s healthcare.
A quiet holiday trading period sees very little economic data to influence the ‘Greenback’. Instead, the market looks set to shift to a more risk-averse stance as headlines out of China concern investors. Despite a relaxing in Covid restrictions, sweeping infections across the country have overwhelmed China’s healthcare system. US officials have begun talks in introducing new travel restrictions for those arriving from China.
A lack of economic data until after the new year will see the ‘Greenback’ continue to operate on external factors. If global market sentiment continues to sour on news out of China, safe-haven currencies such as the US Dollar
Euro (EUR) Undermined by Escalating Ukraine Conflict
Meanwhile, the Euro is struggling for much demand in the face of rising geopolitical tensions in Ukraine. A lack of major economic data is leaving the single currency exposed to a souring market mood.
After President Joe Biden announced the US will be sending Patriot missiles to aid Ukraine, Putin responded that Russia will ‘100% destroy them’. Fears of escalating conflict were justified as Putin stepped up aggression in the recently liberated city of Kherson. When asked about resolving the conflict, Putin alleged he is willing to negotiate, but his offering was rebutted by Kiev. He added:
‘We are ready to negotiate with everyone involved about acceptable solutions, but that is up to them – we are not the ones refusing to negotiate, they are.
‘I believe that we are acting in the right direction, we are defending our national interests, the interests of our citizens, our people. And we have no other choice but to protect our citizens.’
Euro US Dollar Forecast: US Labour Market Data to Dent the Greenback?
Looking ahead, the Euro US Dollar exchange rate could see mild fluctuations with the release of labour market data for the US tomorrow. An expected rise in initial jobless claims could sour moods with a cooling labour market.
Meanwhile, any further updates out of Ukraine could weigh on the Euro. Without major data released until after the New Year, geopolitical tensions could continue to drive movement.
