Euro US Dollar Exchange Rate Mixed as Absence of Data Limits Euro Appeal

The Euro US Dollar (EUR/USD) pairing have been trading in a mixed range this morning as markets await the latest interest rate decision from the European Central Bank (ECB).

At the time of writing the EUR/USD pairing are trending around the $1.1774 level as the US Dollar continues to find support from a global risk-off mood.

Euro (EUR) Investors Await ECB Interest Rate Decision

The Euro has found mixed against the US Dollar for much of the morning as markets await the latest interest rate decision from the ECB, as investors are not willing to make any risky bets.

A lack of notable data from the Eurozone could today leave the single currency open to further losses throughout the day as all eyes remain focused on tomorrow.

Investors will be looking  to see if the bank chooses to shift monetary policy following its strategic overhaul a couple of weeks ago.

The Eurozone is also struggling against a rise in delta variant cases of the coronavirus across the bloc, as lockdown restrictions are imposed, further limiting the appeal of EUR exchange rates.

US Dollar (USD) Supported by Prevailing Risk-Off Trade

The US Dollar has found continued support against many of the majors as a prevailing risk-off mood strengthens the appeal of the ‘Greenback’.

The US Dollar looks to extend its gains throughout the day as the market mood sours further and investors are unwilling to make any bets as markets await the latest interest rate decision from the ECB tomorrow.

Karl Schamotta, chief market strategist at Cambridge Global Payments explained the strength in the US Dollar, saying:

‘Shifts in relative growth rate expectations are weakening capital flows out of the US and heightening the appeal of dollar-denominated investments. At the same time, an unwinding in speculative positions is forcing a short squeeze in currency markets – driving the dollar upward.’

Juan Perez, FX strategist at Tempus Inc went on to say:

‘I believe the safe-haven strengthening in the dollar is merited, considering that global progress has been anemic to what it appeared like in Q1 so now all valuations and high expectations for growth are being rightly questioned.’

Euro US Dollar Exchange Rate Outlook: ECB Interest Rate Decision in Focus

Tomorrow, all eyes will be on the latest interest rate decision from the ECB. Investors will look to see if the bank chooses to change its monetary policy stance following the strategic overview in the past couple of weeks.

For US Dollar traders, the latest initial US jobless claims figures could provide fresh impetus for USD exchange rates to head higher towards the weekend.

The EUR/USD exchange rate will continue to be driven by any further coronavirus developments in the coming days as global cases surge.

Georgina Clissold

Contact Georgina Clissold