Euro to Dollar Exchange Rate Slips after Post-ECB Rally

On Friday, the euro to dollar exchange rate eased from its Thursday rally as investors digested the European Central Bank (ECB) meeting yesterday. 

Accordingly, the currency pair plummeted 0.23% to 1.17, declining from its hike of 0.65% yesterday. 

Moreover, ECB President Christine Lagarde opposed the market expectations as she pushed back the recent pricing of two rate hikes by December 2022. 

Consequently, traders reacted to the recent policy decision that is odd to the bank’s economic outlook.

Subsequently, the ECB Survey of Professional Forecasters anticipates 2021 eurozone inflation to spike above 2.30% from the previous rate of 1.90%. 

In 2022, they oversee the inflation to edge up 1.90%, higher than the prior figure of 1.50%. 

At the same time, their projected gross domestic product widened to 5.10% this year and 4.50% in 2022. 

On the economic data front, Germany’s recent unemployment change declined to -39,000 from September’s number of 30,000. This supported the last rally of the euro.  

However, third-quarter German GDP slipped to 1.80% from the last quarter of 1.90%. It also came in lower than the analysts’ forecast of 2.20%.

In the broader Eurozone, the consumer price index (CPI) increased to 4.10% from the last data of 3.40%. It also surpassed the expected 3.70%, which is bullish for the euro. 

Also, its gross domestic product slightly improved to 2.20% from 2.10% last quarter. 

Moreover, the euro weakened broadly against its rival currencies. 

For instance, the EUR/CHF pair tumbled 0.33% to 1.06, falling to a more than one-year low. 

At the same time, the EUR/GBP pair fluctuated 0.19% to 0.85 as the EUR/JPY pair sank 0.09% to 132.48. 

US Dollars Up as Euro Retreats

Meanwhile, the USD edged higher after dropping to a month low against the euro yesterday. 

The US dollar index, which trails the greenback against a basket of major currencies, elevated 0.18% to 93.52. 

Subsequently, investors looked forward to the Federal Reserve’s meeting next week.

Consequently, the market expected the Fed to initiate asset tapering in November. 

Elsewhere, the GBP to USD exchange rate plummeted 0.03% to 1.38. 

Additionally, the Bank of England will also hand down its policy decision next week. 

Then, the AUD to USD exchange rate lost 0.16% to 0.75 after reaching its highest since early July. 

Moreover, the USD to CHF exchange rate shed 0.05% to 0.91 as the USD to CAD exchange rate unchanged to 1.23. 

Conversely, the USD to JPY exchange rate climbed 0.18% to 113.75.