As traders speculate that the European Central Bank (ECB) will be forced to increase liquidity to curtail the flagging Eurozone economy, the shared currency softened versus many of its major peers. Compounding the downtrend was less-than-ideal German data.
With risk sentiment dampened amid falling oil prices the Australian Dollar softened versus most of its major peers. However, demand for the safe-haven properties of gold has allowed the Australian Dollar to recover initial losses.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4431.
Euro (EUR) Exchange Rate Softens on ECB Intervention
With ECB intervention seemingly inevitable, especially with oil prices set to stay low, the common currency has performed worst of its 16 major peers in the last quarter of 2014. With speculation rife that the central bank will introduce full-scale quantitative easing at their next policy meeting, the decline extended into 2015 and is continuing at present.
Compounding the single currency downtick was Tuesday’s German data showing that the Wholesale Price Index declined on both a monthly and yearly basis in December.
The Euro to Australian Dollar (EUR/AUD) exchange rate has fallen to a low today of 1.4453.
Australian Dollar (AUD) Exchange Rate Trending Higher on Gold Rise
With oil prices falling below $45 a barrel, market sentiment dampened considerably. Demand for the high-yielding potential of the ‘Aussie’ (AUD) cooled as investors flock to safer assets. However, gold prices improved thanks to demand for safe-haven assets.
‘Prices continue to free-fall and there is little that can stop them,’ stated chief analyst Amrita Sen. ‘OPEC remains the only factor that can stabilize markets in the short-term. But with the group out of the picture, the market is looking elsewhere for a tangible reaction.’
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Steady
With a lack of data to provoke changes and with the Euro decline already priced-in, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold steady. With that being said, any shift in the commodities market could initiate movement.
The Euro to Australian Dollar (EUR/AUD) exchange rate advanced to a high today of 1.4548.