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Euro US Dollar (EUR/USD) Exchange Rate Rises Ahead of US Initial Jobless Claims Report

April 22, 2021 - Written by John Cameron

EUR/USD Exchange Rate Edges Higher Despite Souring Risk Sentiment

The Euro US Dollar (EUR/USD) exchange rate rose today despite souring risk sentiment buoying demand for the safe-haven ‘Greenback’. The pairing is currently fluctuating around $1.20.

Demand for the safe-haven US Dollar has risen today after India hit a record of over 300,000 Covid-19 infections in just one day, while Japan’s situation has continued to worsen.

As a result, this has provided a boost for the US Dollar to Euro (USD/EUR) exchange rate today.

However, limiting some of the demand for the ‘Greenback’ has been the US’ own successful Covid-19 vaccination rollout.

40% of the US population have now received at least on dose of the vaccine.

Consequently, demand is beginning to slip for the ‘Greenback’ as the global economy is looking more promising now that the American economy – the world’s largest – looks increasingly more solid.

US Dollar (USD) traders are awaiting today’s publication of the latest US Initial Jobless claims for April.

Last week saw new claims fall to their lowest levels since the beginning of the Covid-19 pandemic.

Any improvement in the latest jobless data could help buoy the USD/EUR exchange rate.

Euro (EUR) Exchange Rate Rises Ahead of ECB Interest Rate Decision

The Euro (EUR) rose against the ‘Greenback’ today despite single currency investors remaining cautious ahead of the European Central Bank’s (ECB) interest rate decision.

The ECB is expected to hold rates at 0%, but EUR investors are concerned that the bank could be notably dovish about the outlook in the monetary policy statement.

Connor Campbell, an analyst at SpreadEx explains:

‘The European Central Bank isn’t expected to ruffle any feathers this Thursday, with analysts predicting that it will be another steady session from Christine Lagarde and co.’

‘But with a while until the next meeting – the central bank skips May – the ECB could use this opportunity to sharpen its forward guidance. There are also hawks lurking among the doves, meaning the get-together may not go as smoothly as forecast.’

France has eased Covid-19 lockdown restrictions and buoyed confidence in the Eurozone’s economy, despite major setbacks this year, such as the delay in vaccination rollouts.

Gabriel Attal, the French Government Spokesperson, was confident about France’s Covid-19 situation, saying:

‘This may be the peak of the epidemic, or close to it. Mid-May there will be a first step with the reopening of venues that have been closed, such as shops and some café terraces and cultural venues. I can confirm that this is what is planned.’

EUR/USD Exchange Rate Forecast: Could Safe-Haven Demand Boost the US Dollar?

Euro (EUR) investors will be looking ahead to tomorrow’s release of the Eurozone’s flash Composite PMI figure.

Any indications that the Eurozone’s economy is struggling from the Covid-19 pandemic would weigh on the EUR/USD exchange rate.

Tomorrow will also see a speech from the ECB’s President Christine Lagarde.

Again, any dovishness about the outlook for the Eurozone’s economy would be EUR-negative.

The US Dollar (USD) will continue to be largely driven by global risk sentiment. If Covid-19 cases continue to rise in India and Japan, then demand for the ‘Greenback’ could swiftly increase.

In US economic news, tomorrow will see the release of the flash US PMI Composite figure for April.

The EUR/USD exchange rate could fall, however, if concerns rise over the outlook for the world’s largest economy.

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