US Dollar (USD) Exchange Rate: ‘Greenback’ Close to Two-and-a-Half Year Low against the Euro
The US Dollar is trading close to its lowest level in more than two years against the Euro after the single currency continued to find support from last week’s decision by the European Central Bank to not introduce further stimulus measures.
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Last week saw the ECB choose to maintain interest rates at the record low level of 0.5% and raise its growth forecasts for the region’s economy. A report released in the previous week showed that inflation in the Eurozone increased, easing concerns about deflation and dimming expectations that the ECB would introduce quantitative easing measures, a move that would weaken the currency.
After the ECB policy meeting the Euro strengthened broadly against its rivals.
The Euro’s gains were somewhat offset after data on Friday showed that the U.S. economy added 175,000 jobs in February, well above expectations for 149,000 new jobs. The strong figure indicated that the Federal Reserve is likely to continue to scale back its stimulus program, which has weighed on the value of the US Dollar.
US Dollar likely to soften further against the Euro
With no major domestic data releases due until mid-week the US Dollar is likely to soften further against the Euro. The most important data releases due for this week are US retail sales, whilst for the Euro a number of reports for individual Eurozone members are likely to have an impact. However, if ongoing tensions in Ukraine escalate again the safe haven ‘Greenback’ will regain lost ground.