Daily Currency Update

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Euro continues its slide

USD - United States Dollar

It’s going to take fewer US dollars to buy something from the European Union today. Demand for USD has outpaced demand for the euro for the last several weeks, pushing EURUSD toward 1.20.

It’s been called irrational, but most indications point toward the EU’s inability to rollout the COVID-19 vaccines. Over the last month, as the EU’s vaccine acquisition efforts have faltered, and the US’s efforts have gained steam, EURUSD went from a high of almost 1.23 on January 4 to today’s low of 1.2008.

This morning, the US ADP Non-Farm Employment figures crushed expectations, a good sign for the currency. The early look of employment growth revealed a 174,000 job increase in January. The positive outcome pushed the US Dollar Index us a tenth of a percent.

Key Movers

The pound continues to be buoyed by the pace of the UK's Covid-19 vaccine rollout as well as encouraging news about the infection rate continuing to drop. The latest figures released yesterday showed new positive cases had fallen to 16,840 its lowest daily total since December and well below the peak we saw in early January when over 60k were shown to have tested positive in a single day. The main area of focus for pound crosses is GBPEUR with sterling making several plays to break above 1.1363 (which represents 0.88 for EUR/GBP) with strong resistance being shown at this key level.

The Australian dollar tested fresh year to date lows overnight, drifting below 0.76 US cents, moving against broader market sentiment following dovish commentary from the RBA. Having touched intraday highs at 0.7660 in the lead up to the RBA policy announcement the AUD fell steadily through the afternoon, extending losses into offshore trade marking new lows at 0.7566. Policymakers surprised markets choosing to extend its QE program and raise the bar for any future interest rate adjustment. While the RBA did upgrade its economic outlook, it suggested a return to labor markets conditions that would support a rate hike were unlikely to be met until 2024. Such a pessimistic and long-dated forecast suggests record low interest rates will remain unchanged for much longer than first anticipated.

Expected Ranges

EUR/USD: 1.200 - 1.204 ▲

GBP/USD: 1.362 - 1.368 ▲

AUD/USD: 0.758 - 0.762 ▲

USD/CAD: 1.276 - 1.282 ▼