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USD takes a bit of a breather from gains

USD - United States Dollar

Demand for the pound and the euro ticked up this morning after a broadly strengthening US dollar took a breather from recent gains. A combination of inflation concerns and rising COVID-19 Delta cases prompted market participants to flock to the safe-haven USD early this week. The US Dollar Index was down 0.09%, trading at 92.89 at the time of writing.

The market’s mood improved a little this morning, which could have helped GBPUSD and EURUSD bounce off multi-month lows. Though it’s hard to find a clear catalyst for the reversal in sentiment, some analysts think that equity markets were oversold on Tuesday.

Key Movers

COVID-19 cases in the Eurozone are ticking higher with a notable jump seen in France, the bloc’s second largest economy. With this in mind there could be a cautious tone from European Central Bank chief Christine Lagarde when she holds a press conference after tomorrow’s ECB interest rate decision. No change in policy is expected and it could be any change in the pace of bond buying as the main area of focus. EURUSD was up 0.14% to 1.7966 at the time of writing.

Demand for the pound picked up slightly this morning after hitting a five-month low on Tuesday. The market’s ongoing concerns over the spread of COVID-19 is benefitting the safe haven dollar, with sterling taking a hit as the Delta variant continues to advance throughout the UK. GBPUSD was up 0.43%, trading at 1.3684 at the time of writing.

Another one-week lockdown was also announced for South Australia, which some analysts say will be a further drag on Australian GDP forecasts and therefore the Australian dollar. Demand for AUD against USD touched its lowest level since November 2020 in early trading before recovering somewhat. AUDUSD was up 0.14%, trading at 0.7339 at the time of writing.

The Canadian dollar gained against USD as investor mood seemed to improve and the price of oil edged higher. USDCAD was down 0.63% to 1.2594 at the time of writing.

Expected Ranges

EUR/USD: 1.1755 - 1.1793 ▲

GBP/USD: 1.3594 - 1.3685 ▲

AUD/USD: 0.7291 - 0.7342 ▲

USD/CAD: 1.2582 - 1.2752 ▼