EUR/USD: Fed Fuel Keeps Euro Afloat, Vaccine Issues May Shoot It Down

“It is too early to start talking about talking about a QE taper” – the words of Charles Evans, President of the Federal Reserve, reflect the general message from the world’s most powerful central bank. It is set to continue printing dollars for some time, pushing the currency lower. The FOMC Meeting Minutes also reflected the Fed’s commitment to supporting the economy, despite acknowledging its recent recovery and improving prospects.

After several Fed members spoke on Wednesday, Chair Jerome Powell will take the stage on Thursday and he will likely reiterate the same message. That will likely keep the downward pressure on the greenback, but upbeat data could push it higher.

US jobless claims are set to drop below 700,000 in data for the week ending on April 2, after rising in the previous week. Other labor figures such as the Nonfarm Payrolls and the JOLTs job openings showed an upbeat employment market.

In the old continent, hopes for a quicker exit from the covid crisis remain elusive. While the US reached a third of its population with at least one jab, EU countries are barely at half that pace. Moreover, Europe heavily depends on AstraZeneca’s jab, where a line between rare blood clots and the jab was confirmed.

Member states’ health ministers failed to agree on a uniform approach, one that would allow sending a clear message. Some countries have banned inoculations with AZ’s immunization for younger people. Even if authorities clear the vaccine for all, confidence has been shattered.

In the meantime, Germany is considering extending its lockdown, France remains under severe restrictions and Italy is also paralyzed. The virus continues spreading, weighing on the recovery.

The European Central Bank’s meeting minutes are also due out on Thursday, and will likely reiterate the bank’s pledge to keep long-term yields at lower levels.

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