April 20, 2021 – Written by John Cameron
EUR/USD Exchange Rate Rangebound as Risk-On Market Mood Weakens US Dollar
The Euro to US Dollar (EUR/USD) exchange rate held relatively steady today. Investor demand for the safe-haven ‘Greenback’ has slipped on hopes that the global economy could be on the road to recovery. The pairing is currently fluctuating around $ 1.20.
US Treasury yields have also slumped to their lowest levels in five weeks because of the Federal Reserve’s repeated statement that the recent spike in US inflation would be temporary.
Added to this, growing confidence in the US economy – the largest economy in the world – has also limited the appeal of the safe-haven US Dollar.
Coca-Cola Chairman and CEO James Quincey, who is a part of Pfizer’s board, commented:
‘I know this time last year, we had a number of discussions about an alphabet soup of different shapes of recovery. Very specifically in the U.S., I think the rate of vaccination is clearly going to bring a reopening that’s going to be relatively rapid in the U.S. And there is a good deal of stimulus money there, so I think we are going to see a good recovery into the balance of the year in 2021 in the U.S. and hopefully, that will drive momentum into 2022 as well.’
Global risk sentiment also improved after the US and China both omitted to cooperating on climate change commitments earlier this week.
Euro (EUR) Struggles Despite Growing Confidence in EU’s Vaccination Program
The Euro (EUR) failed to rise against the ‘Greenback’ today despite growing confidence in the European Union’s (EU) Covid-19 vaccine rollout.
Following reports of the EU’s increasingly speedy vaccination program, EUR investors have become steadily more confident about the Eurozone’s economic recovery.
However, concerns over the EU’s vaccine doubts have dampened confidence that many people will take up the Johnson & Johnson or AstraZeneca vaccine following blood clot reports.
Spain’s deputy health chief Antonio Zapaterd said there’s ‘definitely hesitancy towards AstraZeneca.’
Zapaterd told Euronews:
‘Because the EU has bought a lot of AstraZeneca, if lots of those doses aren’t being administered that would inevitably cause delays down the line.’
As a result, we could see the EUR/USD exchange rate quickly begin to struggle if Covid-19 vaccine fears threaten to delay Europe’s vaccination program any further.
EUR/USD Exchange Rate Forecast: Could Risk-On Mood Further Weaken the US Dollar?
The US Dollar (USD) could continue to fall against the single currency this week if demand for the safe-haven ‘Greenback’ remains compromised by risk-on market mood.
As a result, we could see the ‘Greenback’ sink as investors become more confident about the outlook for the global economy.
The Euro US Dollar (EUR/USD) exchange rate could also benefit from the Euro’s negative correlation to USD and continue to edge higher.
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TAGS: American Dollar Forecasts Euro Forecasts