The Euro exchange rate is gaining strength against the Dollar. With an increase in risk appetite, the Dollar suffered most as it saw a broad decline.
Fear about the second wave of coronavirus infection is rising again. COVID-19 fatalities are increasing, especially in the United States. The death toll is increasing in states like Florida. The economic impact of a resurging corona infection is a rising concern in the financial sector.
CRF Agreement and Covid-19 Vaccine Expectations Boost Euro exchange rate
The single currency has been holding steady for some time. Rising by 1.3 percent against the Dollar month-on-month. The eurozone has been most successful in handling the COVID-19 crisis, which has given special impetus to the Euro rate. Further, with signs of progress in the COVID-19 vaccine, it has brought a sense of relief in healthcare. The falling US Dollar is giving a boost to the Euro exchange rate.
The EU summit, which will take place on the 17th and 18th of July, now holds the key for positive sentiment in the eurozone. The Coronavirus Recovery Fund (CRF) will be discussed, and leaders may agree on this issue. However, analysts warn that the Euro rate will be severely hit if the outcome of the summit is disappointing.
The EUR/USD foreign exchange rate has been on the rise for three consecutive days. Closing at 1.1300 on Friday, 12 July but reached a high level of 1.1450 intraday on Wednesday. Currently, it is trading at 1.1408 at 3.50 pm GMT. There is strong resistance at 1.423 and the Euro rate is facing stiff resistance at this level.
Euro exchange rate has reclaimed 1.14 levels. The Euro has been gaining from the weakening Dollar. The European Council meeting and the ECB decision have been the stimuli to the rising Euro rate whilst weakening the Dollar. The EUR/USD exchange rate will remain bullish as long as it trades above levels of 1.20.
The EUR/GBP currency rate saw an increase for two consecutive days on 13 and 14 July. The Euro, which closed at 0.8948 over the weekend on 12 July, rose to touch levels of 0.9115 on Tuesday. However, on Wednesday, 15 July at 3.50 pm GMT, the Euro currency rate was trading at 0.9062. It has crossed resistance at 0.9002 but trading lower than Tuesday’s highs.
The Euro rate soared, reaching a four-month high of $1.14230. The probability of an agreement at the summit is high. Before the summit, the leaders have engaged in discussions. These talks hold special significance as it suggests that they could reach an agreement.
The experimental COVID-19 vaccine from Moderna Inc has created quite a stir of optimism in the equity market across the United States and the Asian Zone. The fund amount of €750 billion is enormous, and expectations for an agreement are high too. The Euro exchange rate is moving upwards with this positive sentiment.
US Dollar Exchange Rate Falls to One-Month Low
The US Dollar index has drifted below the 96 level, falling to a one-month low at 08.30 am GMT. The US Dollar, which is usually a safe-haven investment, is now being questioned. This is because the economy faces a severe downturn with the rising pandemic and with the rising Euro rate.
Wall Street saw a rebound on Tuesday with positive sentiment running across the equity markets. The commodities market was also upbeat. The Dollar, however, drifted to a one-month low.
The US-China tension is showing signs of escalating. Meanwhile, the Chinese Yuan saw a one-week high as it touched levels of 6.989, with an increase of 0.3%.
GBP/USD Rate Recovers Lost Ground
The GBP/USD, which closed at 1.2622 over the weekend, remains at the same levels after falling steeply to touch lows of 1.2479 levels on Tuesday. On Wednesday, 15 July, it recovered to touch highs of 1.2650 before falling lower to 1.2584 at 3.50 pm GMT. The Pound and the Euro exchange rate has been doing well in recent times.
Though off its lows, the Sterling continues its fight upwards. Since the meltdown after the coronavirus scare, the GBP/EUR exchange rate has been running parallel to the U.S. index.
AUD/USD currency pair has seen a spike in value to touch levels 0.7038 intraday on Wednesday. It is trading at 0.6999 currently. It went past its resistance of 0.7002, which is a 2-week high. It faces another resistance at 0.7063, which is a 2-month high level.
Bank of Canada has decided to maintain its current policy rate. Bank rates are at ½ percent, while deposit rates are at 0.25 percent. Quantitative easily will continue in the country. Further, the bank has stated that it expects a contraction in the economy by 7.8% for the year. Year-on-year, it has seen a 14.6% contraction for the second quarter.