The Euro to US Dollar (EUR/USD) exchange rate softened by around -1.05% on Friday.
After the Swiss National Bank made a shock decision to remove its Euro cap, contagion saw the shared currency slump. With ultra-low interest rates and quantitative easing rhetoric plaguing the Euro, it’s unsurprising that the single currency softened.
The US Dollar, meanwhile, saw increased demand thanks to its safe-haven status. However, the ‘Buck’ (USD) is generally holding steady versus most of its major peers on Friday morning as traders await the influential inflation data.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1514.
Euro (EUR) Exchange Rate Edges Lower on Franc Fallout
As explained above, the shared currency softened across the board thanks to contagion from the SNB’s decision. Although European data mostly printed in line with expectations, the results are unlikely to overshadow the quantitative easing rhetoric, especially after the Swiss Franc fallout.
However, there is the potential for further Euro losses as investors speculate on the reasoning behind the SNB’s actions. If the SNB opted to remove its cap because the proposed quantitative easing programme from the European Central Bank will be far more aggressive than many anticipate, the common currency will extend its declination next week.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low today of 1.1599.
US Dollar (USD) Exchange Rate Holing Steady ahead of Inflation Data
Although the US Dollar strengthened on Thursday as a result of increased demand for safe-haven assets after the Swiss Franc no longer offered a safe place to park money, the ‘Greenback’ (USD) is liable to fluctuate in response to the US CPI. This is especially true given the US inflation data produced mixed results.
A recent spate of disappointing data results caused futures traders to pare bets as to the timing of a Federal Reserve rate hike. Hawks will be hoping that the consumer prices data meets with, or exceeds, expectations.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Decline
Given the increasing potential for the Euro to continue softening as economic divergence widens, the Euro to US Dollar (EUR/USD) exchange rate is likely to decline on Friday. This is likely to be reinforced by demand for safe-haven assets whilst oil prices continue to decline.
The Euro to US Dollar (EUR/USD) exchange rate advanced to a high today of 1.1650.
